While most people want to save more, the vast majority has a hard time putting money aside to meet their own savings goals. In fact, a recent survey found that as many as 63% of Americans are unable to set aside enough money (at least $1,000) to cover unexpected or emergency expenses.
But there is no need to panic if your account balance isn’t exactly where you hoped it would be – you can now get help from an unexpected source – AI-powered bots provided by your bank. If you walk into a bank branch or call them on the phone and ask how you can adjust your spending habits to save more, chances are you’ll get blank stares in return. You will probably be transferred a few times and eventually, you will likely be offered to meet with a financial adviser that can help you build an investment portfolio.
With the vast amounts of your personal data being collected and stored by your bank — balances, transactions, and payments — you’d think they would be able to offer you better and more customized guidance along the path to your financial success. But meeting your financial goals is more about changing behavior — your personal spending and savings patterns — than about picking stock and bonds and this is something that is sorely missing in today’s banking relationships.
That’s where AI-powered bots can be a game-changer. Instead of speaking with a banker that just learned your name and glanced at your balances and account history for 15 seconds before you started the conversation, you can now get the help of a bot that within 150 milliseconds can analyze your most relevant financial activity and suggest practical steps you can take to meet both short and long-term financial objectives.
But a bot can do much more than just give advice and point you in the right direction. For most people, the real challenge is staying the course; it’s just too easy to fall back on old habits. Unlike a banker, the bot is there at all times (forget 9 to 4 banking hours!) to monitor your spending and the progress you make on your savings over time. It can remind you to cut back on spending when you stray from your plan and pop up at just the right time with tips to help you boost your savings, such as when a large deposit is received or before you go on your weekend spending spree.
Are bots ready to step up to the plate with such heavy responsibility to help consumers with their finances? Many banking experts claim bots are not yet ready for prime time. Facebook revealed that over 30,000 bots have been created since it opened up its Messenger platform to 3rd party developers in April 2016. As expected, this bot gold rush has turned up a lot of dust with just a few nuggets to speak of. Examples of poorly designed bots are too easy to find, and many of them will make you giggle or shrug at their simplicity and lack of effectiveness.
While chatbots in financial services are new and will take time to mature, there are several skills they must master on day one in order to be considered useful and trusted by customers when it comes to managing their finances.
Many of the bots we see today utilize simple natural language processing that seems cool at first but quickly falls apart as the conversation progresses. To carry an intelligent dialogue, the bot must be able to maintain the context of the conversation.
Here’s an example: How much did I spend on dining out in July? How about August?
At the same time, it has to be flexible enough to recognize that natural conversations don’t always progress linearly – the bot must be able to process an unexpected reply and adapt to changes in the course of the conversation.
For a bot to be helpful, it needs to know you – not only access real-time financial data and history, but also be able to analyze it to understand your financial behavior and come up with smart recommendations based on your personal goals. That’s not trivial, and that’s why bots need to be purpose-built – you can’t expect a bot to know everything, but you want it to have deep knowledge on the issue you are trying to get help with.
As the bot gets to know you better, it must learn and get smarter over time. While banks are rightly guarded when it comes to letting AI run wild, machine learning is critical to making the bot more useful and personalized over time – accounting for implicit user behavior and explicit feedback when constructing the conversation.
We are already seeing some bots that are providing such capabilities, and they will continue to get better. Will banks step up to the plate and offer these bots to help customers save more?
Ron Shevlin, Director of Research at Cornerstone Advisors and author of the book, Smarter Bank: Why Money Management Is More Important Than Money Movement says financial institutions will have to deliver personalized guidance and advice through digital devices and channels if they want to gain consumers’ trust and maintain their relationships.
If he and many other banking experts have it right, chances are it will not be long before you will get a helping hand from your bank’s bot to help you save more and reach your financial goals.