Financial Service Providers, AI, Satisficing, and the Human Touch In the Market for Financial Nudges and Boosts

Abstract

Advances in artificial intelligence (AI) are reshaping many facets of the decision landscape faced by consumers and investors. These advances have resulted in lower fees and borrowing costs, increased access to financial services, and greater customization. In this paper, I discuss how the need for the human touch impacts the potential for digital technologies to lower the cost of providing mass customization and personalization to the broad market for wealth management. I present the cases of three financial service firms, to illustrate how the failure to account properly for the human touch can result in unsuccessful technologically-based strategies.

Keywords: robo-adviser, human touch, user design, user interface, artificial intelligence, satisficing, nudges, boosts

JEL Classification: G00, G02, G11