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S. Korean banks, brokerages adopt robo advisers

All Headlines 15:50 March 10, 2016

SEOUL, March 10 (Yonhap) -- South Korean banks and brokerages have launched robo-advisory services to deliver consistent returns to investors at slimmer fees, the companies said Thursday, allowing artificial intelligence to encroach upon asset management handled by human beings.

In the past few years, robo advisers have emerged globally as an alternative to human financial advisers who are active but often make costly investment mistakes, according to industry people.

Korea has recently joined the growing trend to take advantage of artificial intelligence in asset management and other financial services.

Domestic brokerages, such as NH Investment & Securities Co. and Samsung Securities Co., are very aggressive in introducing investment products managed by robo advisers.

NH Investment launched the equity-linked "QV Robo Account" in December. Samsung plans to offer robo services by June based on an analysis on stock markets in the past 10 years and investment results, the companies said.

"We don't think robo advisers will replace human advisers. Through robo services, we are providing diverse investment options to customers seeking higher yields amid record low interest rates," a Samsung Securities spokesman said. Korea's key interest rate stands at an all-time low of 1.5 percent.

Among banks, KB Kookmin Bank in January partnered with Quarterback Investments, a local investment advisory firm, to release the "Quarterback R-1," which invests in global assets. In the January-February period, the product achieved an investment gain of 2 percent.

"Given that most equity funds are struggling with hefty losses, the product performed well. Robo services-based products do not seek big gains but steady profits," a KB Kookmin spokesman said.

Other banks, such as Woori Bank and Shinhan Bank, are set to follow suit.

When it comes to digitized services, supporters argue robo advisers, which have a passive approach in investment decisions, can handle customers' portfolio demands and deliver better performance than their human counterparts. Critics say robo services can never replace the expertise of human advisers.

The initial result of a historic match in the game of Go between a human and a computer appears to give weight to the former's argument. In the five-match series that began Wednesday, South Korean Go champion Lee Sedol unexpectedly lost the first round to Google's computer program AlphaGo.

kyongae.choi@yna.co.kr
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