Rise of the robo-bankers?

Investment advisers at the 73 per cent taxpayer-owned RBS bank are set to be replaced by so-called “robo advisers” to cut costs, which will entail the loss of 250 jobs.

 
The bank, which received a bailout to the tune of ÂŁ45bn during the financial crisis, is moving to automate advice for customers who have less than ÂŁ250,000 to invest — a drastic increase from its previous ÂŁ100,000 threshold.

 
RBS has said that new legislation introduced in 2013 has made it unprofitable for the bank to advise customers with less money to invest.

 
The bank will also shed another 220 jobs as it replaces face-to-face advice on protection, such as insurance, with a telephone-only operation.

 
“We are scaling back our face-to-face advisers and significantly investing in an online investing platform that enables us to help a new group of customers with as little as ÂŁ500 to invest,” an RBS spokesperson said.

 
While many media outlets deemed the new online investment advice platform “robo advisers”, RBS clarified, noting that what’s replacing face-to-face advisers uses no artificial intelligence or machine learning and is not robotic at all.

 
The automated system is instead only a series of online forms and questionnaires.

 
Unite questioned RBS’ argument that it latest decision to automate services was motivated by a desire to make its investment advice more affordable.

 
“What we’re seeing is a two-tier advice service,” said Unite national officer for finance Rob MacGregor. “Most customers will now only get online or telephone advice, unless you happen to have in excess of £250,000 to invest, in which case ‘Wealth Manager’ roles have been created to offer a face-to-face service.

 
“Rather than making advice more affordable, they’re making it more exclusive,” he noted.

 
MacGregor highlighted that banks that are pushing to automate many of its services are driven more by ruthless cost-cutting than by any desire to improve its customer experience.

 
“When it comes to machines vs. people, it’s undoubtedly the case that dealing with online forms and automated voices is far more frustrating for customers,” he explained. “The spate of recent IT glitches across the banks, including RBS, shows how fallible this service would be.

 
Unite also believes that, as a publically-owned bank, RBS’ withdrawing from public view – for example, by its mass closure of bank branches in addition to slashing frontline staff – undermines the public goodwill the bank relies on to operate.

 
The importance of maintaining a ‘social license’ between banks and their customers is a point that the Bank of England has also made.

 
“Ending face-to-face services cuts yet another vital human connection between the public and the bank, which is the last thing RBS should be doing when they so desperately need to clean up their tarnished image,” MacGregor noted.

 
The news that RBS would automate services after slashing investment adviser roles comes against a backdrop of continued scandal.

 
The bank reported its eighth consecutive year of full-year losses, amounting to ÂŁ2.5bn in 2015 — ÂŁ500m of this was set aside for its massive PPI compensation bill with another ÂŁ2bn being put towards other legal bills.

 
Despite continued profit losses and thousands of job losses, just last week it was reported that RBS would give its top management team future bonuses in shares worth ÂŁ17.4m.

 
A review of banks’ published complaints data found that RBS received the highest proportion of complaints out of all the major banks, racking up four complaints for every 1,000 customers.