How Artificial Intelligence is Impacting Personal Finance
It seems nearly everyone has been talking about artificial intelligence for years now, and one of the industries where it’s gained the most attention is personal finance. A.I. is becoming so popular that many online banking users today have become used to—and even dependent on—receiving personalized insights into their spending habits, all powered by A.I.
On the other side of personal finance, artificial intelligence also plays a crucial role in retail investing. An increasing number of traders depend on algorithmic trading based on A.I.s to stay profitable. In this post, I’ll discuss these and other ways how A.I. is impacting personal finance and, more importantly, how you can take full advantage of it.
Artificial intelligence refers to a branch of computer science where engineers develop software to “think” independently. The goal is for a computer to solve problems by itself with little to no input from a human. In other words, A.I.s are computer programs that learn by themselves.
Here are some of the benefits of implementing A.I. from both companies and customer’s perspectives:
All these benefits from A.I. are already making it a valuable tool for both companies and customers, which explains why big tech companies have been acquiring A.I. startups left and right.
Of course, A.I. does not come without its risks. For example, one of the primary use cases of A.I. within finance today is to pick wise investments. Remember, though, that this technology is far from perfect, and its efficacy is not guaranteed. Therefore, it’s still a good idea to do your own research by studying the markets and studying investments on your own to spot potential investment opportunities the A.I. missed.
With that disclaimer out of the way, let’s dive in a little deeper into how A.I. is shaping the future of personal finance.
A.I. in mobile banking has already made great strides in terms of adoption. Most people have already seen or experienced it in the form of chatbots and personal finance managers.
A chatbot is an A.I. whose only purpose is to speak with customers and answer their questions. These questions can range from how to perform certain operations to how certain features or services work. With a chatbot at your disposal, you can easily schedule transfers, automate transactions, and even get directed to a live agent if needed.
For short, personal finance managers, or PFMs, refers to a type of A.I. that’s typically used in banking applications or digital wallets. Their job is to analyze all of your transactions to give them context. As a result, they generate insights into your spending habits and suggestions on where you can spend more or where you should spend less. The importance of PFMs is that they allow you to have an eagle’s eye view of your finances to see where they could improve.
These two tools represent the first step towards future tools that will make personal finance even more powerful and useful. The two key reasons for this are:
In 2020, Accenture estimated that 50% of customers now interact with their banks through mobile apps and other online means rather than in person, a figure that was only 34% in 2018. This is partly because A.I.s have made online banking a lot easier to use and more accessible to all types of public.
PFMs and chatbots serve this particular purpose since they’re implemented solely to make things easier for you as a user. Automating transactions, scheduling transfers, and having spending insights available is more than enough to make mobile banking easier, especially if you have “someone” to ask a question to anytime you want or need.
As a millennial or perhaps someone even younger, it’s easy to assume that everyone should be able to use their online banking apps and take advantage of all of its features to the fullest. However, some people will inevitably have difficulties with this technology, even the younger crowd.
