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IT meets finance: financial decision-making in the digital era

In: Handbook of Financial Decision Making

Author

Listed:
  • Francesco D’Acunto
  • Alberto G. Rossi

Abstract

We discuss how information technology has been transforming consumers’ financial decision-making through robo-advising, i.e. just-in-time scalable and portable advice delivered through FinTech applications. We start by describing the unique features that differentiate robo-advising from traditional IT applications to financial services and why such features represent transformational innovations in financial decision-making. We then focus on four pioneering commercial applications in the US and abroad - innovations that empower retail investors with the ability to perform highly-technical investment strategies, to engage in complex tax-saving operations (tax-loss harvesting), to easily access the wisdom of the crowd based on the real-time analysis of big data, and to disintermediate financial services and level the playing field between ordinary households and expert financial intermediaries (peer-to-peer lending). We conclude by discussing the interdisciplinary open questions of robo-advising applications in strategy, management, business, and law.

Suggested Citation

  • Francesco D’Acunto & Alberto G. Rossi, 2023. "IT meets finance: financial decision-making in the digital era," Chapters, in: Gilles Hilary & David McLean (ed.), Handbook of Financial Decision Making, chapter 16, pages 336-354, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:21126_16
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    File URL: https://www.elgaronline.com/doi/10.4337/9781802204179.00030
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    Citations

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    Cited by:

    1. Keffert, Henk, 2024. "Robo-advising: Optimal investment with mismeasured and unstable risk preferences," European Journal of Operational Research, Elsevier, vol. 315(1), pages 378-392.

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