Why Budgeting with Artificial Intelligence Matters

With technology rapidly changing, it’s critical for people and financial companies to look for ways to understand why budgeting and Artificial Intelligence matters when they are brought together to make a difference in the lives millions. Some startups are beginning to explore how to apply Artificial Intelligence to personal finance, but the reality is that the industry is hardly scratching the surface. Going beyond that surface-level Ai claim is something that we do everyday at Vest because we believe that Ai in personal finance will improve the lives of millions of people.

The Need for Ai in Budgeting

The statistics are alarming. Six in ten Americans don’t have $500 in savings. Student loan debt is growing at almost $2,700 per second and has reached $1.4T in total. Credit card debt is mounting, and out-of-pocket healthcare expenses are the number one cause of bankruptcy. High schools, colleges, and parents aren’t giving the education necessary to prepare graduates to face all the financial challenges, landmines, and questions that they face the minute the last note of Pomp and Circumstances fades and the graduation ceremony is over. This has been happening for generations of people entering the “real world”….and now the majority of America needs a solution to help them understand and manage their finances.

Why Human Intervention Alone Doesn’t Work

Technology, in its general sense, plays one major role. It takes a human activity and automates it. So let’s take Vest’s Subscription Manager. Theoretically, you could review every line-item in your credit card and checking account statements. Theoretically, you could then pull out all you monthly subscriptions, input them into an excel doc, tally them up in total, and figure out if there are any you could eliminate. Theoretically, you could then Google how to cancel the unlucky subscription, and after 5 minutes and a bunch of clicking, find that well-hidden cancellation link. However, most of us don’t invest that 45 minutes to save that $5.99 per month subscription. With Vest and our Ai capability, this entire process happens within seconds, and suddenly it makes sense to cancel that subscription. Now you have an extra $72 in your pocket every year…and that’s just one example.

The Future of Ai in Budgeting

Long-term, the companies who get it right will be providing someone with a personalized, concierge experience that finds all the ways that person can save money. To make this work, there are three key components.

1. Making sense of individual transactions. This is by the far the most challenging piece to the puzzle and is foundational to the other components. If you can’t understand where someone is spending money, you won’t be able to help them save money or make any useful recommendations. The problem is that line item transaction data is messy. There are millions of different vendors (companies that people buy things from) with different transaction names. This list of vendors is dynamic and constantly changing as new companies pop up every day, and other companies go out of business. The challenges just extend from there. At Vest, we’ve developed a proprietary way to classify this information us Ai. We call this our classification model. By focusing on the foundational data analysis, we’ll be able to draw real insights that meaningfully find people savings opportunities.
2. Mindfully partnering and aggregating. There is no way that one platform can build every piece to the savings puzzle. Further, future innovation will rely on point solutions that save individuals money in one area. However, the key to the big picture is the platform that can bring all of these apps and services together. You could think of it as a great “rebundling” of the best personal finance apps under one roof. This is the approach that Vest has taken, integrating everything from account aggregation to bill negotiation to deal recommendations.
3. Building the brain. With the classification model to drive insights and the right partner applications integrated onto the platform, then the fun begins. The “fun” is that Ai “quarterback” continuously searching for opportunities within a person’s spend to save real dollars through the set of partner applications. Then it’s making it “Amazon easy” to realize those savings while communicating at the right times through the right channel with the right message.

The future is wide open. It’s an exciting time to be applying Ai to budgeting while working to solve real challenges that will make the difference in the lives of millions of people.