AI — The Catalyst Transforming Personal Finance
As global technologies evolve and the volume and variety of data abound, Artificial Intelligence(AI) is becoming increasingly popular among large enterprises today. The demand for understanding patterns in data has spurred the growth for AI-related processes which are far more efficient in identifying data patterns than human analysts, thereby benefitting companies to understand their target audience and gain insights.
AI and ML are replacing human analysts rapidly as it learns over time and offers the possibility of a lower error count while analyzing vast volumes of data.
Today we use credit history as a means of deciding who is eligible for a credit card and who isn’t. Data about each individual’s loan repayment habits, the number of loans currently active, the number of existing credit cards, etc. can be used to customize the interest rate on a card such that it makes more sense to the financial institution that is offering the card. Data-driven AI can scan through financial records and make recommendations regarding loan and credit offerings that make financial sense.
Chatbots have proven themselves a powerful tool to ensure customer satisfaction, helping them save a lot of time and money.
Financial institutions are also leveraging Robo-advisers(a class of financial advisers) that provide digital financial advice based on mathematical rules or algorithms. These algorithms are executed by software and thus financial advice does not require a human advisor. The software utilizes its algorithms to automatically allocate, manage and optimize clients’ assets.
Personal Financial Management (PFM) is another recent development in the AI-based wallet space. PFM uses AI to build algorithms to help consumers make smart decisions about their money when they are spending it. The idea behind the wallet is very simple, it just accumulates all the data from your digital footprint and creates your spending graph. PFM often lets users categorize transactions and add accounts from multiple institutions into a single view. PFM also typically includes data visualizations such as spending trends, budgets and net worth. It’s definitely an upgrade from making lengthy spreadsheets or writing on a piece of paper.
Investment companies have been relying on computers and data scientists to determine future patterns in the market. Trading and investments depend on the ability to predict the future accurately. Machines are great at this because they can deal with huge amounts of data in a short period of time. Machines can be taught to observe patterns in past data and predict how these patterns might repeat in the future. People can be notified of appropriate time zones for buying, holding and selling stock, when the market is expected to fall, etc. Managing finances can be a challenging task for many of us, but the intervention of AI in Finance is a blessing indeed!
