How AI Can Help Financial Literacy
The main ways AI benefits financial management are data analysis at scale and personalization without the professional adviser price tag. A human financial adviser develops personal recommendations for their clients over time for a much higher fee; AI, on the other hand, can give users that bespoke experience by quickly ingesting and analyzing years of transaction data, usually for a few dollars. Your best bet is to use AI tools that help you draft a personalized budget or break down your spending habits.
What to Watch Out For
As Reece Rogers of Wired experienced, AI apps like Cleo and Bright are supposed to give users financial advice, helping them reach their money goals. Ultimately, however, the interactions Rogers describes with both apps indicate that the chatbots were less interested in instilling behavior changes than in upselling him subscriptions and short-term cash loans, which often had fees associated with them. He described those suggestions as feeling like the bot was taking advantage of his desperation, encouraging him to spend in a way that contradicted his established goals.
This isn’t an AI-specific problem. The difference between an AI adviser and a human one (or bank) may not be that great. Like other businesses, many financial institutions are incentivized to upsell users and exploit vulnerabilities towards their bottom line. As Rogers points out, an AI assistant may be just as good (intentionally or unintentionally) at predatory lending simply because it can more quickly analyze your personal behavior and identify your weak spots — basically, it can automate questionable advice.
Conclusion
While AI financial products cost less than human money managers, what you save in labor costs may be redirected into fees for specialty training the model wants to offer you. The conversational nature of a chatbot can give users the impression they’re engaging with an entity that’s truly invested in their financial well-being. However, all AI models are programmed with an objective, and it’s essential to be aware of the potential drawbacks and limitations of AI financial tools.
FAQs
Q: What are the benefits of using AI financial tools?
A: AI financial tools can provide personalized advice, automate tedious tasks, and offer a more affordable alternative to human money managers.
Q: What are the limitations of AI financial tools?
A: AI financial tools are only as strong as their training, and they may not always provide the right advice. Additionally, they may be incentivized to upsell users and exploit vulnerabilities towards their bottom line.
Q: How can I ensure I’m getting accurate financial advice from an AI tool?
A: Take any advice a chatbot gives you with a grain of salt; consult another source and verify any claims it makes before moving your money around.
Q: Are all AI financial tools created equal?
A: No, not all AI financial tools are created equal. Some may be more accurate and useful than others, depending on how well they’ve been fine-tuned or supplemented with finance-specific models.
