How AI is Supercharging Money Management

In today’s modern world, there are few areas where AI isn’t revolutionizing the way things have always been. The finance industry is no exception, and AI-powered technologies are proving to be indispensable for businesses and individuals looking to better manage their money.

Whether to inform investment decisions, help customers budget better, allow businesses to better forecast, or increase financial access in the developing world, AI is driving forward financial management on multiple fronts.

In fact, the AI in BFSI (banking, financial services, and insurance) market was valued at $20 billion in 2022 and is expected to grow to a staggering $100 billion in 2032, according to Global Market Insights.

Let’s explore exactly how AI is supercharging money management, from personal finance to business planning.

Driving Personal Finance Management with AI

Getting to grips with your personal finances is a pain in the head for most people. But using spreadsheets to keep track of what you’re spending and budget accordingly no longer needs to be part of your to-do list – there are AI tools that can do this for you.

AI tools can unify your online bank accounts, track your spending habits, and then provide personalized recommendations to optimize your savings. Wally is one AI-powered app that helps you budget by automatically categorizing your expenses and income streams and suggests when to save. WallyGPT, its in-app chatbot service, greatly simplifies this process for users.

AI can also forecast the impact of financial decisions on your credit scores and recommend strategies to manage debt. For example, online bank SoFi uses AI to inform its lending process, using customer data to offer lower rates and higher potential for savings.

Empowering Wealth Management

In addition to helping you manage your spending, AI-driven applications are now able to provide personalized investment advice based on market trends.

Robo-advisors can deliver investment advice and help you manage your investments at the click of a button. And unlike human advisors, robo-advisors are available 24/7, and at a much lower cost than a traditional financial advisor.

Magnifi is an example of a robo-advisor that provides completely personalized investment advice and diversification assistance for a low cost. The company describes itself as a ‘copilot’ for investing and can help you plan for future financial goals with the help of its AI-powered conversational assistant.

Leveraging AI for wealth management can also help customers understand potential outcomes based on simulations for different financial decisions, helping them with scenarios such as retirement planning or risk assessment.

If you’d still prefer to have a human in the mix, hybrid advisories pair human creativity and strategy with the power of AI. While the AI can handle vast amounts of data and make suggestions according to market conditions and volatility, the human advisor can interpret the advice and tailor it to the customer’s feelings, aspirations, and concerns, leading to highly personalized advice.

Expanding Financial Access

Populations across the world that have traditionally not had access to financial institutions are now able to access banking services thanks to AI-driven technologies. Many of these tools do not require users to have a bank account with an existing institution and allow users to sign up simply with their ID and phone number.

These tools can analyze the credit score of unbanked individuals through mobile usage patterns and bill payments, enabling them to access loans. AI usage here accelerates credit validation and makes loans available more quickly.

AI is also providing personalized financial education based on the individual’s financial habits and needs and can educate them about savings, investments, and insurance. This is an invaluable asset for populations who have historically not had access to financial literacy resources.

Worldcoin is one example of AI expanding financial access. The global cryptocurrency platform aims to provide financial access to everyone, no matter their country or background while respecting user privacy. AI powers biometric scanning within the ‘Orb’, a spherical device used by Worldcoin to ensure the person signing up is human and only signs up once.

In addition to supporting unbanked populations, AI is also expanding access for those who may have issues navigating digital interfaces, such as the elderly, or people who are visually or hearing impaired. By enabling truly adaptive and accessible interfaces, AI can help provide access to financial services to previously excluded demographics and improve financial literacy.

For example, together with InsightsDriven, intive has built a new generative AI offering, ConnectingYouNow. The platform helps businesses create truly accessible and inclusive digital interfaces that empower users instead of excluding them on the basis of ability. It does this through its conversational AI interface that adapts to user actions and needs, its powerful semantic search engine, and a state-of-the-art retrieval augmented generation approach (RAG) using large language models (LMM).

Enhanced Forecasting and Predictability

For businesses, AI can help them simulate various financial scenarios to support their strategic planning and risk management. It can forecast future income and cash flow, enabling the business to plan and budget accordingly.

Many lenders are using AI to predict liquidity based on past data, to ensure they have enough cash to release to borrowers at the right moment. For example, JPMorgan Chase employs machine learning algorithms to analyze transaction data and predict future cash flows.

AI is also helping credit rating companies access higher levels of predictability. For example, the US credit ratings company Equifax recently launched OneScore. This machine-learning-powered tool analyzes alternative data such as utility bills and subscription TV payments to measure creditworthiness.

Do you want to know more about AI? Find out more about AI and machine learning.

The Future Outlook For AI and Money Management

Looking ahead, we can only expect to see AI be further integrated into the way we manage our money, whether as individuals or larger organizations.

Data will remain at the core of the development of AI in financial management. Models will require even more clean, accurate data to be able to perform well and avoid biased outcomes. At the moment, many of these models lack the quality they need to produce reliable results, but it is only a matter of time before this data becomes available. More and higher quality data combined with the improvement and development of new AI applications will drive innovation in finance and ultimately shape its future.

In a similar vein, AI will become even more integral to ensuring data privacy and fraud detection, as the threat of hacks and breaches continues to rise. Tools such as WormGPT, FraudGPT, and WolfGPT are making it easier to craft malicious code, hijack websites, or conduct phishing attacks at scale. AI will be crucial to mitigate these attacks and maintain data privacy and security.

Conversational AI interfaces will evolve into even more human-like agents, providing personalized and accurate information for users. AI-powered automation will also improve in conducting of routine tasks with greater accuracy and efficiency.

Know Your Customer (KYC) will be enhanced for fintechs thanks to AI, as it leverages advanced biometrics and potentially even social profiles to ensure regulatory compliance, better risk management, and an enhanced customer experience.

AI in finance is here, and it’s here to stay. Whether for the consumer, big business, or financial institutions themselves, not cashing in on the value that AI has to bring will prove a costly error.

Are you looking to supercharge your fintech product with the power of AI? Get in touch today.

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