With the power of artificial intelligence (AI) and machine learning, banks and other FIs have an opportunity to help consumers manage their budgets and plan for big life events. Find out how the industry’s most innovative companies are using these technologies to build financial solutions and apps to attract and engage today’s evolving consumer.
In our everyday lives, it can be difficult to monitor our spending habits and see how they impact our overall financial health. According to Abe AI founder and chief operating officer Keith Armstrong, that’s the kind of burden AI can help alleviate.
Abe AI works with financial institutions to offer AI-powered voice and chat applications for customers who are looking for a virtual coach.
“For us, it’s about creating simplicity, convenience, and consistency within a person’s financial life. We are particularly focused on leveraging natural language understanding as a means to open up new channels of engagement that fundamentally change how financial institutions and consumers are able to engage and interact with one another,” says Armstrong.
With traditional personal financial management software, consumers can see how much money they’ve spent or what’s left in their savings account. But the problem is that those numbers don’t necessarily incentivize them to change their habits. Armstrong argues that people need new tools that let them know when they should save, how to pay back their debt in a responsible way, how to improve their credit, and other money-related quandaries.
He says that the “real power” behind machine learning is that it can help predict a person’s financial future by studying their past behavior.
“There’s a lot of financially fragile people in this country who yearn for and would very much welcome some assistance with their finances in ways that don’t feel like they’re being shamed or that don’t create a lot of work for them,” Armstrong continues.
With voice and chat messaging apps, financial institutions can start gathering what Armstrong calls “conversational data” about their customer’s lives — like whether they’re planning for a wedding, a new baby, or other big events — and guide them from there. They can start off by using simple methods, like incorporating an automatic savings solution that periodically asks people if they want to put away more money.
And if consumers feel comfortable with that, they might also be interested in more long-term help.
“When you’re struggling day-to-day, week-to-week, you’re not necessarily in the mental frame of mind to plan in very rational ways based on historical data,” says Armstrong. “And so if, every week, maybe a chatbot gets in touch with me and says:
‘All right, Keith, here’s what you have, here’s what you’re going to make, here’s what you’re going to spend, and here’s how I expect your account to finish off at the end of the week. Is there anything you have planned that I need to know about?’
‘Oh, yeah, I’m going to the Jack Johnson concert in Austin.’
‘Okay, that’s an increased spend outside of your normal behavior, let me factor that into your cash flow.’”
Adds Armstrong: “It’s about getting people to talk a bit more about what they plan to do with their money, because it’s in their head, but it’s just not on paper or in a data table somewhere that folks can act on.”
AI might even encourage people to continue these financial conversations at their local branches. But it has to be a reciprocal relationship: People won’t give up some of their privacy if they don’t see a useful return on that investment. Banks and credit unions have to earn their trust by clearly explaining how that data can help improve their financial wellness.
“Banks can do more than just be a place that securely stores your capital and offers you some basic tools and charges you fees,” says Armstrong. “The concept of the financial institution doing more and playing more of an active role is where I think they need to go. If you can do so in genuine and meaningful ways, I think people will be receptive to that.”
If you want to learn more about how AI and machine learning can improve the personal finance industry, and how to increase customer satisfaction and engagement, make sure to attend our upcoming VB Live event.
Don’t miss out!
Attendees will also learn:
- How AI and machine learning are powering today’s financial wellness tools
- Recent research from Aite Group on financial wellness tools and virtual financial wellness coaches
- How digital tools, chatbots, and interactive assistants can revive the concept of traditional personal financial management (PFM)
- How to use an API to gain insight and deliver actionable advice
- How to leverage data intelligence to build apps and solutions that help users improve their financial health
- Katy Gibson, VP of Application Products, Envestnet | Yodlee
- Keith Armstrong, Founder and COO, abe.ai
- Tiffani Montez, Retail Banking Senior Analyst, Aite Group
- Evan Schuman, Moderator, VentureBeat
Sponsored by Envestnet | Yodlee