Consumers in every generation, from millennials to boomers, are worrying about their financial health more than ever. They have serious reasons to be worried: according to Bankrate 65% of Americans save too small or nothing. There is so much information out there to guide Americans through how to make more, save more, spend less, and actually be able to retire at a reasonable age, but most of these advice (not even mentioning that there is so much noise compared to real signal) makes consumers increasingly frustrated with the multitude of tools available and also distracted from focusing on a specific financial goal.
Americans feel comfortable using the traditional personal financial management tools that have proliferated during the past several years. Nearly 1 out of 5 adults in the US use at least 1 budgeting app. The problem with those apps/tools is that they are static: they depict a great snapshot of the users “financial past”. These personal finance management tools are concentrated on “remembering and fixing” what’s going on with your money, but not assisting you in the decision making process: for instance giving you personalized advice about where to go next to pile up wealth and make it grow.
In this distracted world, our brains are influenced to spend more and more. It can be difficult to monitor our spending habits and see how they impact our overall financial health. With traditional personal financial management tools, consumers can see how much money they’ve spent or what’s left in their bank account. But the problem is that those numbers don’t necessarily incentivize them to change their habits and discipline to control their personal finance.
Lack of money is not the problem. The problem is the lack of financial discipline. If you lack it you will always struggle with money whether you make $10,000 a year or $100,000 a year.
People need to put efforts to cope with the lack of financial discipline and to get the benefits of these budgeting apps — the apps give you the data, but the hardest part is to make the decision and take that next step.
Artificial intelligence (AI) has come a long way in recent years and promises to transform how we work and live. From transportation to healthcare to self-driving cars — everywhere you can see AI applications, which make decisions on behalf of humans. We’re already starting to see the potential of this groundbreaking technology.
In finance, AI has been quietly working behind the scenes to transform the industry. Banks are already leveraging AI mostly for 2 broad purposes:
One of the most promising areas for AI emergence has been in the realm of personal finance. In the US living paycheck-to-paycheck is rapidly becoming the norm for a lot of people. Nearly half of Americans (49%) say they spend more than they can reasonably afford. Using predictive technology to analyze spending habits and to provide valuable advice has the potential to change American’s lives.
It’s not the money, it’s what you do with it that counts.
Through the use of advanced data processing, personalization, and intelligent decision making, AI based platforms are aiming to help users manage and build their wealth.
These are just a few of the ways AI is helping consumers:
And there are some clear benefits on why so many entities are relying on AI to provide personal finance management related services to their users:
There are also some clear disadvantages to relying on AI in the personal finance (customer overconfidence, potential manipulations), but the same can be said of any technology. But AI is only going to get better over time (so long as we allow it to self-improve). That doesn’t mean you should put your full faith in finance on AI tools, but that doesn’t mean you should ignore them either. Instead, as consumers, we need to be prudently aware of the complexities of the technology, and perceive that it keeps improving so as we use it the best we can.
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