The Digitization of Service: Finance and the Future

At the 2012 TEDxReset Conference in Istanbul, futurist speaker Thomas Frey predicted that over 2 billion jobs would disappear by 2030, led by big losers in the power, transportation, and education industries.1 Most of the jobs cut will be casualties of economies of scale and efficiency. This isn’t a new threat. Automation has evolved its bulls-eye; having decimated the labor markets of the agricultural and later industrial models, it has now aimed treacherously toward a human capital-heavy, professional service sector.

What does digitization and automation mean for the financial industry?

Forget the advent of automated teller machines. ATMs and even credit cards are beginning to become artifacts in an era where nearly every professional entertains the processing power of a fully-functioning computer in their pockets. Consider that the equivalent of 87% of the world’s population comprises the total mobile subscriber universe.2 In the US, about a quarter of web users are mobile-only.3 Now, even the precious plastic of credit card providers is slowly losing its behemoth share of commerce to smartphones with new technologies that embed banking and payment options.

The Apple App Store and Android Marketplace have numerous financial planning and advising apps, including ones by big banks and web power players such as In 2011, over 15% of all finance searches were mobile.4 These numbers may be chalked up to an increased need for information (accompanying wealth gains in participating parties), and easier, frictionless access to Darwinistic search engine results all vying for valuable face time and loyalty.

Many of the apps and web-based tools for the finance industry have been complementary to real-life advice and direction from planners, advisors and accountants. Many of the tools are powerful calculators for specialty-professional use.  Others simply grant 3rd-party access to account information. But what happens when software rears its head directly toward the interactions that define the relationships of clients with their advisors, planners and CPAs?

A start-up for financial start-overs

A San Francisco-based tech firm is aiming to do for mobile investing and wealth management what did for personal banking. Having launched its public beta, this firm offers a free online and mobile investment service for financial consumers to maintain and enhance their investments—having already helped manage over $30 billion in investments.5

The service is similar in style to It pulls different account information onto one platform and then offers a real-time, insightful overview without the need for any manual entry. What’s their secret sauce? How do they make money?

They have a patent-pending diagnostic tool for the portfolio that offers personalized investment advice for wealth management and growth. Its feature set not only replaces many of the tasks of a financial advisor (i.e. attempt to fix under-performers, reduce fees, etc.) but it also alerts customers to “broker/advisor…over-charging or under-delivering.”6

Sounds perfect, no? Maybe we should all call the finance industry quits and bow down to our algorithmic software overlords. The financial services industry is more vulnerable than ever, right?

Not so fast. On the surface, finance is the perfect industry for automation. Consider the tasks that computers excel at:

Yet at the same time, technology spurs job creation and role evolution in newly fashioned knowledge areas. The Center for Public Education notes studies by economists identifying “increased demands for certain set of skills:

Sound familiar? There are limits to the processing power of an algorithm. Software cannot be aware of your experiences, dreams, hopes or fears. Software does not understand your tolerance for risk, and even if it did, we as consumers require explanations and qualifications from our service professionals. Without addressing the core weakness of this or any other start-up, how can something as important as your financial future not be a nuanced communication process and long-term exploration?

Relying on software to give you answers on your IRA or 401k without any description of why or how, for example, is akin to relying solely on WebMD for your health diagnosis and treatment options. Now imagine if WebMD was flawed by numerous conflict-of-interests.

Safe, for now

The problem with comparing personal banking with investment and wealth services on mobile platforms lies in the human and personal interaction dynamic  between the user and the bank or the investment/wealth services provider. In apps, there is an assumption that the user understands the actions they are taking, why they are taking such actions, and how they affect the user’s future. The app in question here attempts to fail-proof the model by allowing clients to use the service whether or not they have a financial planner. Similarly, the tool provides a referral network of vetted “local financial advisors.”

Maybe tools like this app are not as threatening as we think. As we mentioned above, technology helps evolve job roles and responsibilities in specialty knowledge areas. Wealth management is not the same as booking the cheapest flight online. The depth of investment options, asset allocation decisions, and risk tolerance relies on a variety of critical but personalized assumptions. A chart comparing different funds and offering hypothetical earning opportunities does not take into consideration the nuisances of market volatility. In fact, most times only a subject-matter expert will completely understand the “how’s-it-goings” of an account feed.

Apps like this shift the focus to trading more, which generally correlates negatively to long-term returns. Furthermore, when hackers have broken into the security systems of commerce giants such as Visa, will users feel comfortable giving all of their bank and account passwords to a start-up, even if the encryption means the company doesn’t actually see any of the information? Storing all of that sensitive information on a server is a risky bet.

Moreover, while advisors are accountable to their clients (especially fee-only and fiduciaries) and heavily monitored by regulatory agencies, new tech tools are not as scrutinized. The firm we’ve been talking about, for instance, earns a commission only on new investments made through the site’s recommendations, and they insist that there is no “pay-to-play…[no] privileged ranking.”9 Again, how does the client verify this? What guarantee does a client receive that this won’t change?

Whereas transparency is a mandate of the firm philosophy in financial advising offices—“this is what we do and this is how we do it”—mobile tools like this barter clarity for convenience.

Rest easy, advisors. Your job is safe for the time being—at least until GoogAppleMazonBook builds a semantic robot that draws on a lifetime of web and mobile data. In that case, it will probably be smart enough to delete this article off the face of the Internet!


Wipfli Financial Advisors, LLC (“Wipfli Financial”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC); however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Wipfli Financial is a proud affiliate of Wipfli LLP, a national accounting and consulting firm. Information pertaining to Wipfli Financial’s management, operations, services, fees and conflicts of interest is set forth in Wipfli Financial’s current Form ADV Part 2A brochure and Form CRS, copies of which are available from Wipfli Financial upon request at no cost or at Wipfli Financial does not provide tax, accounting or legal services. The views expressed by the author are the author’s alone and do not necessarily represent the views of Wipfli Financial or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Wipfli Financial, and Wipfli Financial does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Wipfli Financial of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional.
Nima Tolooi

Founder, Former Editor in Chief

Nima Tolooi is the founder, web developer and former editor-in-chief of OneBite. He was formerly the Interactive Marketing Manager for Wipfli Financial Advisors, based in Chicago, IL.

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The Digitization of Service: Finance and the Future

time to read: 5 min