How Artificial Intelligence Can Help Light Your Path To Financial Stability

Of all the buzzwords that have mesmerized our world over the past few years, only a few can match the impact of artificial intelligence (AI) – and for good reasons. We’ve never been more dependent on virtual assistants like Siri and Alexa for help with our to-dos, we’ve readily welcomed the tech that gives us those thoughtful recommendations on Netflix and YouTube, and even entrusted autonomous cars (and soon, trucks) with our safety on the road.

Breakthroughs in machine learning, natural language processing, and other areas of AI have helped integrate AI-powered technologies into different facets of everyday life, including where it hurts most for many of us: personal finance.

This is especially significant in a country where the average American would struggle to cough up $1,000 in case of an emergency. In fact, with an average savings rate of just 5.5 percent and only 45 percent of Americans maintaining a rainy day fund, the country has some of the scariest numbers in the developed world when it comes to financial wellness.

With AI, however, it becomes much easier to see the areas that are wrecking your finances. Here are a few ways that AI can help you avoid being part of the grim statistics.

AI, Saving and Debt Management  

Helping you save is one of the more practical ways that AI is being put to use in everyday life.

Wallet.ai, a personal financial management (PFM) startup based in San Francisco, is among an increasing number of AI-based platforms that are helping people make smarter decisions when spending their money.

Wallet.ai keeps track of seemingly unimportant data – like where you eat, how you get around, and even your favorite shopping locations – and uses the data collected to offer suggestions on how you can save. This, according to Wallet.ai founder and CEO, Omar Green, offers users a simpler and more intuitive way of managing their finances as opposed to using a pen and paper or a spreadsheet.

Plum, another AI-powered savings assistant, goes even further by automatically deducting some money from your income and putting that into an interest-earning savings account. Plum uses a bunch of algorithms that compares your income against your spending habits, calculates how much cash is left over, and pushes this sum into the savings account.

Alex Michael, co-founder and CTO at Plum, says users save about $200 on average, often without even noticing.

Debt management, another sticky situation for many of us, is also benefiting immensely from AI. Traditionally, it’s often been lenders who have been using AI to help with loan underwriting, with AI-powered platforms such as Datanomers gaining traction in recent years. These, according to Scott Wiggins, an analyst at Personal Loans Inc, have led to the rise of AI platforms that customers are using to help them manage their debt. Wiggins says many would-be borrowers are now coming to them with troves of curated data, thanks to AI-powered personal finance apps like Penny that help make the process cheaper and smoother for both the lender and customer.

AI and Investing 

In addition to saving and managing debt, AI is also helping average Joes and Janes make better investment decisions.

Trade Ideas, a fintech startup and a finalist for the upcoming 2018 Benzinga Fintech Awards, is a prime example of AI-powered platforms that are leading the change in this area. Trade Ideas uses AI to sift through tons of trading data to help individual investors, institutions, financial advisors, and hedge funds make the right investment decisions.

Trade Ideas basically works as an AI-as-a-service provider, which, according to co-founder and managing partner David Aferiat, provides a unique opportunity for its 8,000-plus subscribers.

And while AI investment platforms – or Roboadvisors as they’re popularly called – still have a long way to go in the real world, they are already making a lot of noise in the investment world. Paul Gian, an investment consultant and founder of Beyond4Cs, says most of the investment advice he dishes out to his huge database of clients is often based on analytical information from AI platforms such as Trade Ideas, which often gives his clients an upper hand in stock markets.   

Bottom Line

Of course, there are trade-offs, like losing a portion of your privacy to third-party platforms. But at the end of the day, it’s all about finding your way around a world that is rapidly evolving around technology. Giving up a little bit of personal space might not be all that bad if you’re gaining a ton of personal finance insights and getting help with your finances – as long as an effort is made to protect your data and information.