Artificial intelligence is a vast and complicated field. AI can range from simple algorithmic functions to neural capabilities that could one day even simulate consciousness, and yet we often take it for granted in our daily lives. Artificial intelligence and machine learning processes now drive many of our financial technology (fintech) services and connect investors with a broader range of fast solutions.
For personal finance, AI works wonders. You can change the way you plan and budget for the future by automating tedious elements, monitoring problems, and improving the results that make up personal finance.
These are some of the most promising applications of AI in personal finance.
Automating the tedious
Whenever AI comes up, the topic of automation is not far behind. This is because AI by its nature creates automation potential. AI is generally defined as software that performs a function previously thought to require a human-like level of intelligence. As you can imagine, this definition covers a wide range of applications. However, it is automation that triggers the biggest reaction from the public, and for good reason.
Automation has the potential to displace workers and spark economic change. Although some experts estimate that AI automation will create more jobs than it will destroy, there is no doubt that thousands of workers will find it impossible to transition to a new type of workforce.
However, when it comes to personal finance, AI automation can take care of tedious stuff. Creating a working budget requires a lot of calculations and consideration of variables. Instead of carefully monitoring such a budget plan, you can apply the help of AI software to create solutions for you and automate best practices.
Creating an automated savings plan is one of the best steps you can take when saving for a down payment. That’s because an automated plan is harder to neglect or put off for another month. Artificial intelligence defies expectations by more easily solving problems that are difficult for humans, such as sticking to a budget. It’s the things that humans find relatively easily, like not bumping into things, that give machines the hardest time.
While you can’t automate everything, AI can take much of the hassle out of making and sticking to a budget. From there, it can also help you monitor potential problems with your personal finances.
One of the most promising features of AI is its ability to monitor systems and react to certain circumstances. Financial institutions are harnessing the power of this tool to offer unprecedented self-service solutions for their customers. This typically takes the form of mobile apps that track spending and alert users to potential fraud.
AI makes this possible by modeling thousands of instances of fraud and then examining the incoming data for warning signs in real time. The system looks for information such as the amount of the purchase, the card and the location of the user. From here, you can get a better idea of how someone is managing their personal finances so that fraudulent activity becomes clear.
Teradata is an example of an artificial intelligence company that offers financial technology solutions to its clients. In one case, Teradata helped Dankse Bank align its processes with modern industry while reducing the 1,200 false positives in fraud detection the bank had previously experienced.
By offering people transparency and surveillance over their finances, AI works to improve the human experience. It offers each of us the ability to monitor and act on our financial data from the convenience of a smartphone. With these ever-advancing tools, people can improve their financial results in a variety of ways.
Improve financial results
AI can hold the key to a financially independent future for users who apply it with care and attention to detail. Like all financial tools, AI can have mixed results if it’s not clearly built and executed. You should treat your use of AI in fintech the same way you would treat a digital will: by drafting clear instructions about what you would like it to do, and then inventorying each point of value.
AI offers powerful benefits for users who apply it to financial goals. Once again, saving money is one of the most important financial results that personal finance software can help with. For emerging generations strapped with student debt, navigating payments can only be possible in many cases with the help of smart financial tools.
Take the case of Tally, a personal finance app that uses AI to help users save. The algorithm helps guide the user’s budget decisions based on the goals they have put into the app. For one user, this worked so well that she was able to reduce her debt by $10,000 in two years.
The effectiveness of AI tools in improving financial results is very positive for future generations. We’re already seeing more manageable debt and better credit scores from Gen Z compared to their millennial predecessors, and while this may be a symptom of economic trends, mobile and digital literacy certainly play a role in this financial success.
All it takes to manage an effective budget is persistence and awareness. AI offers these features in abundance while tailoring custom solutions for each user based on their data. In the future, these features will be increasingly applied in the daily financial management of the average consumer, leading to more informed spending practices and better results.
Tools like AI in personal finance show that technology can make a real difference in how people manage their money. Consider AI in your own use of fintech systems to experience the benefits for yourself.