Robo-Advisors Marching Into New Services: More Lower Cost Financial Services Are Coming Soon to Your Smartphone

When the robo-advisor revolution started a few years ago, market leader Betterment sought to become the “Apple of finance.” Algorithms and elegant technology replaced  bricks and mortar, and bank tellers and reduced investment management fees.

But since then, disruptive financial services from peer-to-peer (P2P) lending to wire transfers have been built on the much leaner blockchain. Blockchain is a secure, digital ledger system that replaces cumbersome bank back office and legacy IT systems. The potential threat is an opportunity for robo-advisers which are being swept up in the integration of financial services and fintech.

Forecasted to have $16 trillion in assets under management by 2025, robo-advisors are seeking opportunities to up-sell new products to their increasingly affluent wealth management clients. At the same time, insurtechs, online lenders and other fintech verticals are marching into robo-advisory services.

From automated investing and beyond, following are some of the fintech innovations coming to your smartphone.

The Latest Robo-Advisors


Insurance is a natural vertical for robo-advisors, which will both buy and build insurtechs. The early movers are differentiating themselves with innovative, niche insurance products.

Zhong An has taken on China’s insurance giants through its popular online insurance products, which include e-commerce return insurance for merchants and default insurance for P2P lenders. A popular product is automatic activation of air travel insurance when a flight is cancelled, allowing you to book a new flight with your topped up funds while still at the airport. Zhong An plans to sell its more than half a billion digital insurance clients more low cost fintech services, including lending and robo-advisory investment services, by migrating to the blockchain.

Smart home first mover Neos is revolutionizing the staid insurance industry model with digital  insurance products that integrate with the smart home. The Internet of things has truly arrived with smart sensors that can alert you to fire, floods or other dangers in your home through the Neos app, and call 24/7 emergency assistance. The possibility to remotely conduct damage inspections could allow an insurance claim made through the app to be processed within hours. The Neos drone can film intruders and spray them with “skunk spray” – a repugnant mix of chemicals – as you watch via smartphone – Take that robber!


Several online loan companies are entering wealth management by launching robo-advisories. Technology has lowered the barriers to entering wealth management, but clients should ensure these financial services supermarkets are not taking on  excessive exposure to subprime credit risk as they enter new businesses.  SoFi, the student loan refinancing expert, is adding robo-advisory, mortgages and credit cards to its virtual service offerings.

Ally Financial is investing in the blockchain to compete on costs with P2P lenders using the leaner transaction system. The consumer finance leader has turned online auto lending into the leading US digital personal financial services suite, offering auto and home loans, robo-advisory, credit card and retail banking services.

More P2P lenders have moved into Ally’s home turf – auto finance – by lowering fees. LendingClub offers to lower interest rates on auto loans refinancing, which it estimates are 200 basis points overpriced on average – a potential savings of $1,350 over the life of a loan. offers auto loans unsecured by collateral.  The P2P lending market, which has laxer credit standards, is experiencing a spike in defaults.

Alternative Wealth Management

Many millennials are seeking alternative investments to passive robo portfolios to increase their returns. About 10 percent of Betterment’s clients qualify as accredited investors who are eligible to invest in alternative products such as hedge funds or venture capital.

LendingRobot is investing in hedge funds of loans. Like hedge funds it targets individuals with a net worth of at least $1 million, but the cost advantages of being on the blockchain could be a real disruptor to the traditional hedge fund industry. LendingRobot charges a management fee of 1.0% of assets under management versus a hedge fund industry average of 2% plus a 20% performance fee.[3]

P2P lenders such as LendingClub have applied the robo-advisor’s automated portfolio approach to investing in loans. Loans are bundled together by credit rating and recommended to investors based on their risk/return profile. This convergence of P2P and robo-advisors is yet another example of the innovation ahead as digital personal financial services expand vertically.



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