The big high Street banks will buy out or team up with existing robo-advisers to secure a place in the automated advice market this year, an expert predicts.

Simon Bussy, principal consultant at Altus, said the second wave of robo-advisers would emerge in the coming months.

With the FCA and Treasury looking to encourage more digital and automated advice services, paving the way with a regulatory sandbox and the recommendations of the FAMR, Mr Bussy said the circumstances were ripe for the banks.

There is a chance for banks to “re-engage with their mass-market customers cast adrift post-RDR” – and robo-advice is a “logical next step”, Mr Bussy believes.

He said: “Despite nervousness around systemic issues if the robo-algorithms prove to be fallible, this is too big an opportunity for the banks to ignore.

“But without the in-house expertise, or time, to develop Robo 2.0 solutions what will the banks do? A likely outcome will be a partnership or acquisition of one of the existing robo solutions, and we’ve already witnessed examples of this in adjacent sectors: Aberdeen’s purchase of Parmenion, LV=’s majority investment in Wealth Wizards, Investec’s acquisition of Jemstep, and Blackrock’s purchase of FutureAdvisor.

“Other large organisations - blue chip employers, EBCs, retailers, affinity groups and the banks themselves – are all likely to follow a similar path to provide a low cost service to their customers or members.”

He said: “This marriage of big brand with digital disruptor brings together distinctive but complementary skillsets and capabilities.

“That is trusted, well-known brands with significant numbers of existing mass market and mass affluent customers, many in serious need of financial advice.

“And Small fintech entrepreneurs with expertise, an innovative mindset, a single-minded approach, and the technology.

“Whether the big banks can balance these two remains to be seen.”

He warned firms considering whether to step into the automated sector to beware of indecision.

He said: “There is enough evidence globally that the way financial services are purchased and serviced is rapidly changing. Take a look at the apps you’ve downloaded onto your smartphone – Banking, Uber, Spotify, Skype, Netflix, AirBnB - to see how you are part of the disruption taking place in other sectors.”

Some adviser firms will steer clear of developing their own robo proposition for fear it would “dilute their brand reputation, or take focus away from their existing higher value business”, he said.

He said: “Such firms may be better placed to invest further in technology to automate or digitally enable as many processes as possible in their full advice proposition, to achieve greater efficiencies, reduce costs, and speed up the process, all of which benefits the end client.”

To read more from Mr Bussy on this subject click HERE.