In a fast-evolving world, everything is moving faster than ever. Artificial Intelligence is changing the world of finance.

A recent study found that millennials will inherit trillions by 2036. The study indicates that the younger generation will define the future of finance. Financial literacy rates are, however, low with staggering implications. According to American Consumer Finance, the average American has $11,000 in unplanned credit card debt, $20,000 in student loans, almost no retirement savings, and more than 40% of Americans can not pay an unexpected $400 expense without borrowing or selling something.

Personal finance revolves around making sure you are saving money for the future while spending wisely today. To meet these needs in an increasingly digital age, many companies have begun implementing artificial intelligence solutions to make personal finances easy and more convenient for users. Artificial intelligence (AI) and its subfields, machine learning, and natural language processing are changing how we deal with the complexity of issues in the world of finance. Financial technology (FinTech) innovations are beginning to create new solutions that they claim will make finance more accessible and user-friendly than ever before.


3 ways artificial intelligence (AI) is transforming the world of finance.


1. Automated Investing

Is a form of financial planning that uses computer algorithms to generate tailored financial advice for individuals. It is an automated approach for investors with limited time to buy, sell securities and commit to their investment strategy without the need to check the market or manage their portfolio. Robo-Advisors is also a new type of automated investment advisor that only requires setting an amount of money each month to invest in any financial product like stocks, bonds, or mutual funds, and your advisor takes care of the rest.

The benefits of AI Automated Investing

  • Investors can open an account with just a quick risk-profiling questionnaire, information including financial situations, risk tolerance, and goals.
  • The automated advisor uses this data to recommend a set of investments and rebalancing or tax loss harvesting services if the client chooses them too.
  • The cost is minimal because it involves less human labor. Typical fees for services are between 0.20% to 0.30% annually. So if an investor puts $1,000 into service and it costs them 0.30%, that means they pay $3 per year for the service.






2. AI Debt Collection

A debt collection AI (artificial intelligence) is a machine learning model that can identify debts and flag them for human review. In AI-based debt collection, a computer searches the credit report of debtors for information such as account balances and payment history.
AI-based debt collection allows companies to automate the process of collecting debts, saving time and money.

The benefits of AI-based Debt Collection

  • Speeds up the collection process by eliminating manual tasks such as data entry and validation.
  • Ensures that data collected is accurate, whole, and on schedule.
  • Reduces inaccuracies and omissions that result in errors, late fees, and penalties.
  • Improves customer experience by providing personalized support tailored to individual customers.
  • Minimizes the chance of fraud by identifying suspicious activity on accounts.
However, AI-based debt collection does have some drawbacks as well.

First, it can take longer for AI-based systems to identify borrowers than it does for humans to do so. Thus AI-based systems may not catch borrowers who do not pay their debts on time, but only after they have fallen behind on payments over a long period.

AI systems can also make inaccurate judgments based on slight changes in data between persons. For example, if two persons have identical names but different birth dates, the algorithm may wrongly assume they are the same person and mail them both.


3. AI-based Credit Services

AI-powered credit services are technologies that assess and predict the creditworthiness of a person. AI-based credit services help businesses determine which customers will be likely to repay their debts and which ones won't.
Deep learning, a related technology, has been used for several years by firms such as Google and Facebook to analyze images and text to recognize items more rapidly and accurately than a human could. Similarly, AI-based credit services use these same technologies to analyze the financial history, payment history, and other personal information of potential customers to make more accurate predictions about their likelihood of repaying debts.
These technologies are still new, so there are not a large number of businesses that currently use them. However, there is growing interest from both organizations and consumers in using AI-based credit services to make smarter decisions about choosing their customers.

The benefits of AI-based Credit Services

  • AI-based credit services use artificial intelligence technology to help consumers manage their credit profiles. AI does not only help people understand their credit but also helps them manage their financial situation.
  • AI-based credit services can automate tasks such as detecting financial patterns, monitoring spending, and analyzing data to determine eligibility for loans or other financial assistance. These services can also help people pay down debt, build savings accounts and improve credit scores.
  • AI-based credit services can use machine learning to learn how a person uses their credit card over time and then predict whether they will likely pay their balance on time.
  • AI-based credit services can Monitor spending behavior and alert people when they are about to exceed a set limit, helping them avoid fees and saving them money in the long run. Still, other tools track spending habits and determine whether they are being aggressive with their spending or if they are being financially responsible.

Five Finance-Based AI Apps



Wizely

Wizely is an AI-powered money-saving app that gives users the option of a Flexi or Savings Plan, allowing them to save little by little.


Eva Money

Eva Money is a customized financial helper available for iOS and Android. It uses voice and chats functionality powered by AI. It enhances the overall monetary well-being of users by leveraging artificial intelligence to provide answers to questions about their money.


Zest AI

An AI-powered platform businesses use to assess customers with limited credit histories or other information. To help lenders make more accurate assessments of populations who have historically been labeled "at risk," the technology uses hundreds of data points and provides transparency.


AlphaSense

Is an artificial intelligence (AI)-powered search engine for the financial sector that serves clients like banks, investment firms, and Fortune 500 companies. It uses natural language processing to analyze keyword searches in filings, transcripts, research, and news to find changes and trends in financial markets.


Abe AI

Is a digital personal assistant for money management, that works with Google Home, SMS, Facebook, Amazon Alexa, and mobile to give users more convenient banking.
The assistant offers services, from basic information and assistance requests to banking and personal financial management.