IndexIntroductionDigital transformation, AI and Robo-advisorRobo-advisors and FinTechThe beginning of financial technologyHigh demand for ETFs and Robo-advisorsConclusionIntroductionRobo-advisors are automated investment solutions that involve actively provide individuals with the digital resources and tools to guide them in their investment decision by creating and managing their portfolios through techniques that use algorithms. The role of advisors has had an established view over the last 40 years that the best way to get a higher return on investments is to involve a human being to get the best financial advice. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay Robo-Advisors are the new disruptive change for the banking system. This new entry in the barrier field has entered the market due to changing demographics and a focus on generational changes. As a result, the demand for digitalization of the banking system and all financial services is increasing as technology is changing the nature of the banking sector. Digital Transformation, AI and Robo-Advisor You can already see artificial intelligence on your smartphones, every time you use Siri or ask Alexa a question, every time you use satellite navigation you use some algorithms, artificial intelligence recognizes your speech and provides you with search results. According to scientists, “artificial intelligence is the new electricity”. Imagine when electricity powers everything you do, but with artificial intelligence it powers how you live. How did artificial intelligence become possible? There are four exponents of the rise of artificial intelligenceComputer performanceBig DataAdvanced algorithmsIncreased funding from companies and scientific research to implement artificial intelligence.Machine learning is a version of artificial intelligence focused on teaching programs to learn. It is the level of intelligence that continues to grow by storing big data and with a narrow domain of interest actually surpasses human performance. There are many attributes of intelligence and having a lot of intelligence and the ability to calculate quickly would greatly help the advancement of automation. The advantage of having a computer that is smarter than everyone else in stock trading would give the individual a distinct advantage. With the advent of technological disruption, artificial intelligence will automate not only physical tasks but also mental ones. Automation is advancing in the world. In the case of financial planners, it is estimated that 15% of the average financial planner's time is spent on tasks that can be performed by artificial intelligence. A financial planner's argument would state that AI can't take over talking to your clients. The misconception many have about AI is that everyone talks about automation as a job destroyer, the reality is that automation changes the way we do our jobs. In fact, AI does things much faster than an average human, less prone to errors and much more convenient. With machine learning capabilities we are teaching these algorithms how to learn trading techniques and methodologies, then the algorithms themselves leverage optimization techniques to extract information otherwise not possible using human acumen alone. The importance of big data For machine learning algorithms to be effective, they need a lot of data. ANDconsidered the new oil as companies are adopting digital transformation. Data ownership is very important for companies as it allows you to learn more about customer overtime. Robo-advisor and FinTech What is Robo-advisory? New wealth management trends have emerged for financial institutions that are leveraging customer information with algorithms in order to build and develop automated portfolios and investment strategies and recommendations. This new development has created a new term called “Robo-Advisor”. With this new development, financial firms have seen tremendous growth by moving investment dollars to the robo-advisory platform. Robo-advisory is an automated investment advisory platform that provides algorithm-based advice at a very low cost without human intervention. The whole concept of this technology is based on algorithms that can provide logical financial advice at a low cost compared to what human advisors charge without any prejudice. Robo-Advisors approach any client without a screening and pre-selection process regardless of their financial status. The niche that Robo-Advisors operate in seeks to serve younger clients who don't necessarily have thousands of dollars to invest or to serve a client base that wants to reduce fees and is looking for ways to save without having to. shelling out the high cost of commissions to pay a financial advisor. The Millennial generation has taken advantage of this low-cost wealth management software platform and is reforming financial markets and driving change. Can Robo-Advisors understand emotional responses? Artificial intelligence algorithms are much more reliable than people. The argument is that people are not transparent in the same way as an artificial intelligence algorithm. The human factor in replacing human brokers with Robo advisors is about human interaction. Many Robo investing platforms lack the performance track record and data on how to limit downside exposure. You may have limited control over asset allocation and fund choices. Many questions are arising about how this platform can protect the customer from panic selling or overtrading. The beginning of financial technology Financial advice will be accessible to all thanks to digital onboarding, digital relationships and digital engagement. Many companies are entering the Robo-Advisement business and finally understand that this is the future of investing. The customer signs up for the online service by providing information on investment goals, income and risk tolerance. The computer software program uses that information to choose the client's investments or monitor the client's portfolio behavior to produce a very detailed risk model. An automated application for robo investors that asks you many questions such as age, income, investment style, risk tolerance, etc. Based on the answers, it will customize a profile with a mix of portfolios such as stocks, bonds. This application is suitable for users who do not want to go into the details of what they are investing. Betterment is an automated investing platform and 100% passive investing with no minimum deposit. The investment is in ETFs (Exchange Traded Funds) where it tracks a set of different assets. ETFs allow for a higher return without having to worry about picking stocks and reallocating your money. Betterment invests in two types of funds, stocks and bonds, and has optimized the portfolio to offer its customers the best.