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Description
The emergence of so-called Robo-Advisors (RAs) is disrupting the financial services industry. RAs are algorithm-based systems that digitize and automate the investment advisory process including portfolio recommendation, risk diversification, portfolio rebalancing, and portfolio monitoring. Scientific research in this field is still in its infancy and lacks a comprehensive understanding of the underlying business model (BM) of RAs to comprehensively understand the RA business and to further identify their potential to disrupt the financial services industry. Therefore, in this article, we conduct a multiple case study across the fifteen biggest US-based RAs to explain the basic characteristics and special features of RA BMs. Thereby, we distinguish between pure algorithm-based RAs and hybrid RAs with dedicated human oversight. Through an in-depth analysis of publicly available qualitative data, we contribute to the existing research by unleashing significant elements that underline the power of RAs to disrupt the financial services industry.
Recommended Citation
Metzler, DennisRenee; Neuss, Nicole; and Torno, Albert, "The Digitization of Investment Management – An Analysis of Robo-Advisor Business Models" (2022). Wirtschaftsinformatik 2022 Proceedings. 2.
https://aisel.aisnet.org/wi2022/finance_and_blockchain/finance_and_blockchain/2
The Digitization of Investment Management – An Analysis of Robo-Advisor Business Models
The emergence of so-called Robo-Advisors (RAs) is disrupting the financial services industry. RAs are algorithm-based systems that digitize and automate the investment advisory process including portfolio recommendation, risk diversification, portfolio rebalancing, and portfolio monitoring. Scientific research in this field is still in its infancy and lacks a comprehensive understanding of the underlying business model (BM) of RAs to comprehensively understand the RA business and to further identify their potential to disrupt the financial services industry. Therefore, in this article, we conduct a multiple case study across the fifteen biggest US-based RAs to explain the basic characteristics and special features of RA BMs. Thereby, we distinguish between pure algorithm-based RAs and hybrid RAs with dedicated human oversight. Through an in-depth analysis of publicly available qualitative data, we contribute to the existing research by unleashing significant elements that underline the power of RAs to disrupt the financial services industry.