No trust, no use: how young retail investors build initial trust in financial robo-advisors

Abstract

Purpose The purpose of this study is to describe and analyse the effect of a set of determinants on initial trust and behavioural intention to use financial robo-advisors (FRAs). Design/methodology/approach The theory of perceived risk and the behavioural finance paradigm were used to develop a conceptual model of retail investors’ initial trust in FRAs. Data collected from 554 young retail investors (YRIs) from Sweden and Malaysia were analysed using structural equation modelling. Findings The results of this study indicate that the amount of public information, social media information-seeking and a rational decision style are significantly related to initial trust in FRAs, which in turn is significantly and positively related to the behavioural intention to use this technology. However, none of the risks under study significantly affect the initial trust in FRAs. Practical implications Information is vital to inducing YRIs to rely on FRAs, so the more public and social media information is available, the higher their intention to use this technology. However, YRIs vary in decision style, and the results suggest implementing a more sophisticated system than the current “one-size-fits-all” approach to YRI behaviour. Originality/value The empirical-based model enhances the knowledge of the initial phase of trust-building, when YRIs lack sufficient experience of FRAs. By collecting data from two countries, the study’s novel conclusions may help in developing effective FRA services for the youth segment.

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“…Accountants recognize the relevance of blockchain in their job as well as its favorable impact on performance.In the research paper "Blockchain technology acceptance by investment professionals a decomposed TPB model" by Kumari and Devi (2022), the decomposed theory of planned behavior model is investigated using structural equation modeling. Findings revealed that DTPB provides the best fit for the data (Kumari and Devi, 2022).In the research paper "No trust, no use: how young retail investors build initial trust in financial robo-advisors" by Nourallah et al (2022), a set of determinants on initial trustThe author would like to express sincere gratitude to Professor Khaled Hussainey and Professor Aziz Jaffar for their invaluable guidance and support throughout the editorial process of this special issue. Their expertise and feedback have been instrumental in ensuring the quality and relevance of the articles included in this issue, and the author is grateful for their dedication to promoting the advancement of knowledge in the field of digital accounting and information technology.…”

“…In the research paper “No trust, no use: how young retail investors build initial trust in financial robo-advisors” by Nourallah et al (2022), a set of determinants on initial trust and behavioral intention to use financial robo-advisors are suggested. Results revealed that the amount of public information, social media, information seeking and a rational decision-making style are positively associated with FRAs.…”

“…In the research paper "No trust, no use: how young retail investors build initial trust in financial robo-advisors" by Nourallah et al (2022), a set of determinants on initial trust…”