It is expected that personal finance management software will have grown tremendously by 2023 globally, with an estimated revenue of $1,213 million. This is a significant growth considering the market was just $837 million in 2017. Although the revenue growth in the AI-driven PFM is a considerable achievement, the rapid increase and development of this industry is crucial in this market.
Automate it
Autonomous finance, which includes financial services driven by AI algorithms to help in decision making on behalf of a customer ,is slowly gathering pace. It has shown the potential of replacing human expertise in financial decision making while also ensuring that customers have access to services such as financial-related coaching and other daily money and planning matters 24/7.
Although this technology is showing good signs already, the question which remains is whether people will trust AI. As evidenced by how people have embraced this technology, the answer to the question is yes. Credit Karma in their research has indicated that the public is comfortable with autonomous finances, even more than they are with the self-driving cars. Millennials who form one of the most significant customer bases have confidence in the use of AI in financial planning since most of them find finances too hard to understand.
Many FinTech companies are already getting into autonomous financing by venturing into different vital niches. Wealth management, for example, is one of the niches that AI is revolutionizing. It uses advanced AI-powered algorithms with big data analytics to offer suggestions on the best course of action to customers. Some known examples are Wealthfront and Betterment both of which are Robo-investing solutions. These two have however been facing competition as new types of fully automated wealth management applications and assistants make entry to the market. For example, Deloitte’s Robo-Advisor 4.0 comes up with optimal asset allocations based on the needs of the customer using a self-learning AI algorithm. It also devises the market conditions in real-time allowing customers to adjust their portfolio based on the prevailing conditions.
Personal savings and budgeting niche is another PFM space that is growing. Examples of apps in this area are YNAB and Mint, which have effective user interfaces that help users access their banking services. Although this first-generation PFM software made a statement a few years ago, new AI-driven solutions are now edging them. Some of these include Digit, Plum and Cleo which were fronted by FinTechs and other financial instruments leveraging on AI to assist in financial coaching and advising on investments, savings and suggest spending. In the lending niche, Chinese fintechs are exploring how they can use AI with digital banking by leveraging big data analytics and machine learning capabilities to ease micro-loans.
As Ai keeps improving, large financial players are in a few years going to resort to AI and autonomous finance to manage your financial needs and services. The goal here is to make it easy for the customer to carry out banking and investment activities easily, automatically and effectively. Since customers want better guidance in matters finances, introducing AI-powered apps allows banks to deliver quality and collect insights which are needed in future decision making.
