A financial Technology Application to Assist with Investment Advice in South Africa

Abstract

Executive Summary With the advent of the Fourth Industrial Revolution, it is imperative for the financial services industry to be at the forefront of technology-based services. Yet there is a gap in the South African financial services sector, which requires a technology-driven service for unbiased algorithmic-based financial advice that is instantaneous and low cost. Research was thus conducted to ascertain the desirability and viability of a technology-driven financial services application in the form of a “robo-adviser”, with the millennial generation being selected as the target market. Literature relating to the behaviour and mentality of the millennial generation, financial technology, robo-advisers, the adoption and uptake of technology, and trust in digital technologies and services was reviewed. A cross-sectional study utilising an electronic survey was distributed to collect quantitative data on millennials living in Johannesburg. A quantitative analysis was then performed which utilised descriptive and inferential statistics to draw insights and recommendations on how to build the proposed business. The rich insights gained from this allowed for the formation of a business proposal, which incorporated the key business areas and elements needed to design, build and develop a successful company, based on the Lean Start-up model. The data collected demonstrated that there is a need for a new approach to financial and investment advice. Millennials are willing to accept financial advice based on algorithmic technologies, thus as per the literature reviewed, data obtained and analysis performed, a robo-adviser would satisfy the financial needs of South African millennials, while being a profitable business venture.