The total amount of transactions for personal finance in 2019 was worth upwards of $1trillion. The market’s largest segment is that of robo-advisors, with total assets under management at $980,541m.
The idea of implementing AI in finance is not new. Financial institutions have adopted AI technology from years back, from simple chatbots to more complex robo-advisors. In the decades to come, AI technology will be expected to tap into the world of personal finance.
The face of banking is set to change. AI-powered assistants may control all aspects of people’s financial lives using ultra personalisation and hyper-automation. An AI assistant not only tracks expenses but also learns from a user’s spending behaviour, enabling them to provide recommendations according to the needs of the user.
“The fintech industry is moving from addressing customers’ needs retrospectively to anticipating them using AI” – Heike van de Hoevel, Senior Banking Analyst at Global Data.
Potential Uses of AI-Powered Finance Assistants
The differentiating point of AI technology lies in its ability to learn from its users. While there is still room for improvement, the future of AI-powered finance assistants lie in three features:
- Financial Data Management:
In a world of big data, an AI assistant will be able to extract valuable information from both structured and unstructured data. For instance, its ability to visualise transaction histories into dashboards or extract unusual spending habits from the past year.
- Conversation Engine:
What distinguishes AI assistants from other technologies is the ability for such assistants to understand plain human language and to respond in a way humans understand. Natural language processing (NLP) allows an AI to chat with its user in a human-like manner. This ensures that users are able to fully utilize their assistant’s features.
- Financial Coaching:
AI financial assistants will be able to provide personalised advice. Predictive analytics executed by AI technology would take past data to uncover the necessary behavioural patterns to generate a decision. The technology allows AI assistants to anticipate expenses, income, and aid in the achievement of financial goals.
Current AI-Powered Finance Assistants: What’s In the Market?
Olivia.AI is one of the most notable products that offers a glimpse into the future of fintech. Olivia is a finance assistant that analyzes your spending patterns, predicts your next purchase, and gives you personalised recommendations on how to spend smarter and save more. Users link Olivia to their current bank account to stay informed of transactions and spend smarter.
Digit is another assistant synonymous with Olivia.AI. However, Digit utilizes most of its predictive analytics to save money for its users. It is programmed to automatically transfer an optimal amount of funds to get deposited into a savings account without bothering the user’s day-to-day transactions.
While the idea of having an AI-assistant control one’s personal finance may seem futuristic, it is no surprise that certain segments of the technology sector are slowly adapting to cater to the needs of clients. Traditional banks, like the Royal Bank of Canada, have started to adopt AI technology to develop financial assistants for the betterment of their client services.
