The financial and banking industry is one of the largest beneficiaries of artificial intelligence technology. Artificial Intelligence (AI) is firmly established in finance and banking, from chatbots to cognitive computing, machine learning, and personal financial assistants. With the growing popularity of technology, more banks and other financial companies are turning their attention to artificial intelligence. This paves the way for AI to set new standards on how to make personal finance management easier by building AI-based personal finance assistants. In this article, we’ll focus on what makes AI apps suitable for finance management apps.
Let’s start by discussing the current state of the personal-finance assistant industry.
According to Statista, personal finance transactions are expected to reach £608 million in 2021. Prominently the industry’s largest sector is Robo-advisors, with a projected transaction value of £329 million in 2021. Remarkably, the United States is responsible for the highest cumulated transaction value, £793,887 million, to be exact.
Other than Robo-advisors money management apps is another notable aspect of Financial software. These apps can assist users in tracking their expenditures and help them make wise decisions when spending money. According to GlobalData’s report, 61% of banks customers think that personalized suggestions on financial management are useful.
But the issue with personal finance is that the users can’t keep up with their commitments. They start making plans for savings and investment at an early age, only to find out that it only starts later. Why? According to a report, 54% of college attendees in America have a student loan on their backs to worry about.
“Today, students cover 1.5 trillion under the loan, among which 2/3rd are on women” David Bach, Personal Finance Expert.
These people have a burden to repay their loans before they could think of savings and investments. But their burden isn’t lessened just by repaying the student debt because till the time they repay student loans, other debts like home loans, and car loans have already stacked up to add to that credit card debt. All of this piles up and gives rise to excuses for not saving or investing.
But the use of AI-based financial management apps is a promising way to deal with these issues. Let’s discuss why and how.
AI is already taking the financial sector by storm, be it using AI-powered chatbots, machine learning-based fraud detection systems or Personal finance apps based on predictive analysis. In personal finance apps, AI identifies a user’s personal spending habits based on their buying and spending habits and suggests ways for replacing their bad spending habits with good ones.
Now you got the purpose of which type of AI-powered app you have to develop for the finance world?
The question is how?
Today, AI personal finance management (PFM) has undergone some dramatic changes. One powerful PFM application driven by artificial intelligence is spending forecast, which uses personal data about a user’s spending to create an accurate timeline over a specific period.
The benefits of forecasting costs are clear. Improved risk analysis enables customers and organizations to make the right decisions. Opportunistic forecasting increases the likelihood of identifying and exploiting rare opportunities. The benefits of accurate forecasting are limited only by the imagination, but in general, it all comes down to improving the accuracy of predictions.
It is worth noting that forecast accuracy increases when more customer spending data is aggregated. But as technology gets more sophisticated analytics will be able to deliver impressively accurate predictions over a long period.
As we move closer to the future, many banks are creating AI-powered personal financial assistants to better connect with their potential customers. These AIs can help users manage money and learn smart financial behaviors, like how much they should save for retirement or what type of budget would work best for them. Beyond managing finances, these computers often come equipped with predictive analytics that anticipates upcoming expenses and teaches people when it’s time to worry about debts so as not to be caught off guard by a crisis because who likes being surprised? In addition, some even have fraud detection capabilities, which allow you to buy something online without fear!
Personal finance management apps are all the rage right now, which is why we’re proud to offer custom solutions for entrepreneurs who want a leg up in this rising market. If you need assistance with developing your next personal financial app, contact our team of software engineers today!