Robo-advice is still far from realising its full potential, according to Andrew Lai, director of fintech start-up Financial Ask and founder of Fintech Melbourne.

Robo-advice is still far from realising its full potential, according to Andrew Lai, director of fintech start-up Financial Ask and founder of Fintech Melbourne.

Speaking to FST Media, Lai said the wealth industry was ripe for disruption, as the financial models currently being used by advisers were “not accurate” and unreliable.

“There’s a lot of tall poppy syndrome in Australia, [we have] a lot of people who are happy with how things are and traditional ways of getting financial advice, but for Australia to move forward, we’ve got to change perceptions,” Laid said.

“I personally don’t think financial advice is like health, it’s different. You don’t need the same face-to-face interaction that you have with a doctor.”

Lai said that despite the promising signs of the rapid growth of fintech in Australia and with financial services being Australia’s “number one industry”, there still remains significant room for improvement, especially in terms of lowering the barriers to entry for accessing financial advice.

Last month, in a joint venture with accounting and financial advisory group Findex, Lai’s Financial Ask launched online platform, ASK Crowe Horwath, with the aim of providing the public with an easy point of access to professional and expert opinion.

Lai said the key secret to providing financial advice is that it is “not a mass product” and cautioned against the increasing growth of algorithmic investment solutions, which can be used to identify the risk appetite of customers but do not necessarily provide them with genuine advice.

“The reality is, a lot of the robo-advice you see these days is a farce. Often it works like a managed fund [instead] of providing genuine advice,” Lai said.

“I do not think that genuine robo-advice will come about for at least another 10 years.”

The future of fintech

A report by Deloitte Access Economics in March this year found that Australia’s digital economy will contribute $79 billion or 5.1 per cent of gross domestic product this year and is expected to reach $139 billion by 2020.

However, research into global fintech investment from consultancy William Garrity Associates  – revealed at the Fintech Week in London last month – shows Australia comprises just over 0.6 per cent of total investment in fintech over the last five years, with total global investment amounting to 49.7 billion US dollars during this time.

At a total of 307 million US dollars, Australia’s investment in fintech was dwarfed by investment from other markets such as America and the UK.

Lai affirmed the need for greater collaboration amongst Australian fintech communities, arguing that there is great potential for Sydney and Melbourne to cement themselves as regional hubs for innovation however there is still much work to be done.

“The Australian fintech market is still tiny compared to the rest of the world [and] fintech should be our number one focus,” he said.

“At Fintech Melbourne, we see ourselves as the Switzerland of fintech. Regardless of whoever is coming to grow the ecosystem, we’re all for it.”