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How AI is Changing Your Finances

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In many ways, artificial intelligence (AI) is quickly changing the world around us; but did you know it is also changing how we interact with money and is becoming entwined in the financial world?  It sounds a little far-out, but you’re already interacting with AI from decisions made based on your credit, investments, and banking.

                AI is being used by credit lenders to make decisions and analyze your history by interacting with the underwriting process.  The underwriting process assesses your risk factor when you apply for credit cards, loans, and mortgages.  Underwriting takes into account your identity, income, financial assets, cash status, and risk factors.  One of the best-known examples of AI-powered underwriting is ZestFinance’s ZAML (Zest Automated Machine Learning) platform which boasts the ability to inspect applicants with very little or no credit history.  Lenders in the automotive industry who used ZAML reduced 23% of their company’s yearly losses by predicting risk scores better, and they estimate it saved them more than 25% by delivering more accurate risk prediction scores of their applicants.

                Other underwriting AI platforms being used include contextual underwriting intelligence in the credit card industry.  Scienaptic Systems scores millions of customers, organizes the information, and actively “learns” from the transactions to give scores in a context-based layout, which saved one credit card company from losing $151 million in only three weeks.

                Loans you may apply for might use AI underwriting platforms which match patterns to decide if you’re a worthy applicant when you apply for small business loans or consumer loans.  Even if you don’t apply for those types of loans, if you’re applying for something like a dental financing loan, you may be stacked against underwriting AI intelligence.  Underwriter.ai is used by a major lender in the dental financing industry and the use of their system decreased the rate of which loans they approved defaulted by over 12.4%. 

                Even if you don’t engage in credit or loan activity, AI has made its way into your personal banking.  Due to the demand of technologically current interaction, traditional banking is dying out and making way for AI-powered processes.  AI assistants are providing instant customer service through the use of chatbots to advise you about your personal finances at the click of a button.  The technology behind these chatbots has learned to use natural language to make it easier for us to understand them.

                You can also find AI assistants in banks’ call centers, many of which are powered by KAI, an AI platform specializing in conversation with natural language to help reduce call center’s call volumes by offering self-service solutions.  KAI even offers recommendations about your personal financial decisions based on calculations it performs with your data.

                AI-based conversational banking is present in virtual financial assistants which can even help you with budgeting and tracking expenses.  Abe AI can sync up and integrate with other virtual assistants like Amazon’s Alexa and Google Home, and its newest chatbot app called Slack can support you with managing your personal finances.

                The useful money-saving assistant based on AI is also present in an app called Trim which can help you find areas in your budget that need improvement.  Trim can cancel subscriptions which are wasting your money, hunt for better deals on insurance, and work with companies to negotiate your bills.  As of 2016, Trim saved $6.3 million for its customers.

                With all the AI circulating and touching nearly every aspect of our lives, is it time to start questioning the depersonalization of the financial world?  Now more than ever, we are just data points and metrics which an impersonal artificial intelligence platform is judging.  You can’t deny that apps like Trim can make a difference for most people, but what about when the AI starts impacting the more complicated decisions, such as applying for loans and credit to start small businesses?

                Gone are the days that you interfaced face-to-face with someone at a bank when you applied for a loan who might have been able to apply a small degree of personal belief in you or your situation.  As the finance industry trends more towards efficiency and uses more and more AI, it will be harder and harder to represent yourself or your abilities and appeal to the human judgement aspect of money lending.  It stands to reason, however, that we were always just a number, or risk factor, and that now companies are finding ways to drop the charade of treating you like a person; an individual.  It seems clear that the companies and banks using AI are saving losses and protecting their best interests to make their businesses more efficient—but is it only their interests they are supporting?

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