Is AI the boost for Personal Finance?

Geschreven door journalist Adri Odding

First we have to ask ourselves what is AI for the customer using Personal Finance (PF). The definition of AI is: software that operates and “thinks” like a human being. Or: AI is the ability of a machine to show human capabilities like reasoning, learning, planning and creativity. Some examples of AI can be found in robotization, imitating communication or interaction between humans. Next step is AI learning and thinking for himself by seeing, reading, feeling, hearing using all his senses. A robot is this way becomes conscious like we are. Is this applicable PF? Doubtful!

Personal Finance is all about our money. It’s about how it flows across our accounts. This needs some managing. We all love to spend money and as long as it goes well it’s OK. But too often is goes wrong for many reasons. People don’t know how to manage. This can also be describes as financial illiteracy and this will need education and awareness. Or some technical support by the bank?

Banks are aware of this hurdle for customers and they support financial education for kids on schools, via institutions and so on, that’s ok. But can they do more?  Yes! To do more means looking into the data of  financial behaviour of the customer on their account(s) and possible other financial products in or outside the bank. This asks for data-processing and searching for customers that have or will have soon a negative balance. We all know that negative balances is a source of income for banks, customers pay high interest rates on a negative balance. This has been a positive Business Case for many decades.

Is this still the way banks should treat their customers, knowing that many customer will not be able to manage this issue?  Some go bankrupt and need a long term financial recovery process. Preventing all this should be part of a social care duty, certainly now while banks have powerful computers being able to warn and support customers on their financial misbehaviour.

 Banks and other financial institutions are very reluctant because they see their BC disappear. The social profit of less negative balances with less financial cost for financial recovery are not high enough, so often they hide themselves behind legislation like privacy rules and point out to the responsibility of parents and the community (with high costs elsewhere).

In order to avoid the needed changes of internal processing banks say they do care. Besides helping out on education they introduce budget coaching, but only when the customer applies for this. For a start this is ok! Will this do for the future?

Banks have the data, but the opportunity to process data with AI is left aside. Can we describe AI as a smart process on customer data combined with data from other sources? Doubtful! This is not real AI, this is just a smart process on data with complex software that calculates trends and derives signals and suggestions for customers. We can call this narrow AI?

Final question: will AI be applicable within financial institutions?  Maybe! But how?

We can conclude that an artificial and intelligent approach of our financial data will be part of further development of financial institutions in future. AI will also be part of our own financial wellbeing. AI is more than just financials of a person and in future will use data outside the bank on a higher level and a bigger scope concerning the wellbeing of people.

AI tools will be helping us out and will just do what we financially didn’t do because we were not interested of smart enough to do so. Banks can support this or will they lose the customer?

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