Experiment on Digital Investment Advice

The digitalization of the financial sector is conquering more and more areas: Online banking and online shopping, for instance, have long since become the order of the day in the private-customer segment. Still, customers’ digital affinity is rapidly rising, presenting the industry with new challenges as it does: What can providers of financial services do to reach customers accustomed to the conveniences of digital shopping? How, for instance, can the complex relationships of financial investments be presented in a simple way on digital platforms?

Developing comprehensive digital financial advice is also the aim of “VikoDiA,” a project dating to late 2016 and funded by the European Union and the German state of North Rhine-Westphalia. VikoDiA is short for “Visualization Concept for Digital Investment Consulting” and is a joint project of WHU – Otto Beisheim School of Management and moneymeets, a Cologne-based FinTech. An interdisciplinary team of practitioners and researchers experienced in the financial and digital sector, working under the leadership of Dr. Katrin Baedorf of WHU and Dr. Ruth Kümmerle of moneymeets, is examining the question of how consulting services can be represented in a digital interface.

One goal of the project is to digitally map the points of contact for the consulting service and then explore the resulting customer reactions in greater detail. The project team created two prototypes for this purpose and will now examine them more closely in a study. The first prototype digitalizes the customer’s acquaintance with these financial consulting services. The rules of MiFID II (Markets in Financial Instruments Directive II) form the basis for the suitability test – with further developments contingent on interactive and transparent digital implementation. The focus of the second prototype is on customer-centric reporting: In lieu of a pure description of the current status of the customer portfolio, this digital reporting relies on information drawn from the suitability test about the customer’s investor typology and investment goals and communicates the investment results in a correspondingly individualized form.

When completed, the prototype tests will provide concrete answers about how much complexity is required for a customer to feel well informed and grasp the risks and characteristics of a digitally placed investment, and about whether interactive modules can improve a MiFID II-based suitability test.

Participants can take part in both experiments at vikodia.whu.edu