Building trust in financial robo-advisory and overcoming ethical Challenges

Abstract

Previous research identified five areas where trust could be built for financial robo-advisors. This research identifies the specific methods for building trust for each of these five areas. Building trust with human oversight can be done in three specific ways: (1) oversight of AI model and service it provides, (2) human explanations for advice and processes, and (3) regular human communication outside specific processes. Building trust with transparency and control can be done by: (1) recognise that there are beliefs that do not immediately lead to action, (2) explain actions and demonstrating ability and integrity, and (3) balance automation with control to avoid disempowering users. Building trust with accuracy and usefulness can be done by: (1) accurate and relevant information conveying competence and integrity, (2) usefulness supported by back testing and multiple
methods, and (3) enhanced usefulness through personalisation. Building trust with ease of use and support can be done by: (1) achieve ease of use while keeping all the necessary functionality, (2) support time management with nudges, and (3)
useful and reliable service with high performance. Building trust with a humanlike interaction can be done by: (1) utilise the latest sentiment analysis and longest contextual memory, (2) the robo-advisor should have a clear persona, and (3) build a relationship and a feeling of friendship and partnership.

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Identifiers

ORCID for Alex Zarifis: orcid.org/0000-0003-3103-4601

ORCID for Manuel Nunes: orcid.org/0000-0002-7116-5502

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