After Brexit, artificial intelligence (AI) has become the hottest topic of debate at present. There are many ways in which this most disrespectful technology could change how we might save, spend, and invest in the future. To help understand its life-changing potential, here are 10 ways AI might impact personal banking.
1. Enhanced Security and Fraud Protection – By monitoring every
transaction as it happens and comparing it to historical patterns, AI
could identify fraud in progress, such as my personal bank account being
drained. Equally it can detect warning signs i.e. your financial adviser
being unavailable, changing their spending habits, and buying one-way
flights to the Bahamas.
2. Go Compare on Steroids - AI could take the concept of price comparison websites to new heights. Collating different savings and loan options from across all providers, an AI finance supermarket tool would instantly identify financial product that met our requirements precisely, highlighting small print and full hidden costs. Through an ongoing subscription, this continuous comparison tool could make recommendations to the customer or be authorised to switch financial products automatically as better options emerge.
3. Spending Comparison - AI would allow us to compare the spending of individuals, households, and businesses. Various views could be available e.g. how much do we spend on electricity, food, stationery, or transport relative to people with similar incomes, households of the same size, or comparable businesses to ours.
4. Aggregated Purchasing - My bank could aggregate customer purchase information on an opt-in basis and use it to secure higher discounts from providers based on the total spending power of its customer base. Deals could be offered by vendors, with our personal AI assistants deciding whether to buy based on our needs and interests - only consulting us when the AI doesn't know enough to make a choice.
5. Dynamic Fund Management - The AI systems could look at estimated future spending based on past behaviour, and move our spare cash into whichever savings or investment products offered the best return based on the level of risk we’re prepared to take. Options might range from a stable interest-bearing account to highly volatile digital currency funds.
6. Digital Currency Trading - With growing investor interest in digital currencies like Bitcoin, Litecoin and Ether, our banks could trade the funds we allocate to this asset class - buying and selling on a dynamic basis as currency values fluctuate.
7. Financial Equality - While individuals with limited funds may not be able to pay for a human financial advisor, AI may become the great financial equalizer. Constantly declining technology prices would enable literally everyone to access the best AI investment advice at almost no cost.
8. Dynamic Pricing – Based on our past behaviour data, AI could
predict what price each individual would consider fair. Prices would be
public, but each individual would only see those customised just for
9. The “Jiminy Cricket” of Personal Budgeting – Smart systems would nudge us to make the best decisions for our financial situation. For example, for most 20-somethingsinstead of spending a month’s salary on Friday night, it would encourage more modest entertainment options and invest the rest to help achieve our holiday or retirement goals. The AI might go a stage further and add a small auto-saving amount to each purchase – automatically squirrelling the funds away at each purchase.
10. My Digital Banking Twin – Our personal AI clones or “digital twins” would be authorized to buy, save, sell, or trade on our account. Credit card purchases, bank transactions, bill payments, completing student loan or mortgage applications, and even impulse buys could all be delegated to our digital twin – under the watchful eye of the banks own AI big brother to make sure a digital twin doesn’t go rogue, get hacked, or collude with another to defraud their human counterparts
The applications of AI are nigh on limitless and we can expect to see them proliferate in the marketplace over the next few years. Some may thrive, others may be absorbed by larger institution. The majority will end us as a failure statistic like most technology start-ups of the past. The fun part is trying to pick the winners and convincing our own providers to up their game and bring a little AI spice into our financial lives. Where would you most like to see AI being used in the management of your finances?
Which are the financial situations where you’d still require a human touch?
What are the biggest benefits and risks that you can foresee from greater use of AI in managing your finances?