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How Artificial Intelligence is Impacting Personal Finance – ReadWrite



How Artificial Intelligence is Impacting Personal Finance - ReadWrite

It seems nearly everyone has been talking about artificial intelligence for years now, and one of the industries where it’s gained the most attention is personal finance. A.I. is becoming so popular that many online banking users today have become used to—and even dependent on—receiving personalized insights into their spending habits, all powered by A.I.

On the other side of personal finance, artificial intelligence also plays a crucial role in retail investing. An increasing number of traders depend on algorithmic trading based on A.I.s to stay profitable. In this post, I’ll discuss these and other ways how A.I. is impacting personal finance and, more importantly, how you can take full advantage of it.

What is Artificial Intelligence, and Why is it so Important?

Artificial intelligence refers to a branch of computer science where engineers develop software to “think” independently. The goal is for a computer to solve problems by itself with little to no input from a human. In other words, A.I.s are computer programs that learn by themselves.

Here are some of the benefits of implementing A.I. from both companies and customer’s perspectives:

  • Companies can save revenue by making processes more efficient and automated.
  • The A.I. becomes a revenue-generating asset that reduces the risk of losses and helps financial institutions make more money.
  • Customers can get an edge on financial health with A.I.’s analysis and remarks on spending (automatic spending insights).
  • Customers can enjoy a more accessible financial experience through chatbots.
  • Both companies and individuals can manage risk and automate investing by using A.I.-based trading.

All these benefits from A.I. are already making it a valuable tool for both companies and customers, which explains why big tech companies have been acquiring A.I. startups left and right.

Of course, A.I. does not come without its risks. For example, one of the primary use cases of A.I. within finance today is to pick wise investments. Remember, though, that this technology is far from perfect, and its efficacy is not guaranteed. Therefore, it’s still a good idea to do your own research by studying the markets and studying investments on your own to spot potential investment opportunities the A.I. missed.

With that disclaimer out of the way, let’s dive in a little deeper into how A.I. is shaping the future of personal finance.

Chatbots & Personal Finance Managers

A.I. in mobile banking has already made great strides in terms of adoption. Most people have already seen or experienced it in the form of chatbots and personal finance managers.

A chatbot is an A.I. whose only purpose is to speak with customers and answer their questions. These questions can range from how to perform certain operations to how certain features or services work. With a chatbot at your disposal, you can easily schedule transfers, automate transactions, and even get directed to a live agent if needed.

For short, personal finance managers, or PFMs, refers to a type of A.I. that’s typically used in banking applications or digital wallets. Their job is to analyze all of your transactions to give them context. As a result, they generate insights into your spending habits and suggestions on where you can spend more or where you should spend less. The importance of PFMs is that they allow you to have an eagle’s eye view of your finances to see where they could improve.

These two tools represent the first step towards future tools that will make personal finance even more powerful and useful. The two key reasons for this are:

Ease of Use

In 2020, Accenture estimated that 50% of customers now interact with their banks through mobile apps and other online means rather than in person, a figure that was only 34% in 2018. This is partly because A.I.s have made online banking a lot easier to use and more accessible to all types of public.

PFMs and chatbots serve this particular purpose since they’re implemented solely to make things easier for you as a user. Automating transactions, scheduling transfers, and having spending insights available is more than enough to make mobile banking easier, especially if you have “someone” to ask a question to anytime you want or need.

As a millennial or perhaps someone even younger, it’s easy to assume that everyone should be able to use their online banking apps and take advantage of all of its features to the fullest. However, some people will inevitably have difficulties with this technology, even the younger crowd. This is where talking to a chatbot as naturally as if you were talking to a real person comes in handy, something that was unimaginable a few years ago. Today, anyone can start a chat, type “Transfer $500 to X,” and forget about it; the A.I. will take care of the transaction. It’s that simple!

PFMs go hand in hand with chatbots, sometimes even functioning as part of the same A.I. However, PFMs can also exist as standalone applications that look into a person’s bank account. An example of this would be, an application that’s focused on crafting automated spending insights. It gathers the context surrounding a transaction and gives tips regarding future transactions.

The result is that everything related to personal finance is much easier to do now than it ever was, and we owe it all to artificial intelligence.

Making Digital Banking More Engaging

Engagement and mobile banking apps are not two words that are used together that often. Still, artificial intelligence is making personal finance more interactive and exciting for the everyday user.

Whereas people used to create spreadsheets to keep their finances in check, A.I. now invites them to use personalized spending insights. A.I.’s impact is not about making a better spreadsheet; it’s about technology genuinely helping people with their finances and helping them make better decisions based on insights they probably wouldn’t be able to get just by looking at a balance.

With the adoption of these new tools for personal finance, more people will be willing to go online for most of their banking operations.

Now let’s jump onto another way in which A.I. is impacting personal finance today:

Algorithmic Trading

Investing and, particularly, trading, have been somewhat demystified since their early beginnings. Today, online stock brokers and new financial instruments have made the stock market available to the masses, which has spurred interest in it quite a bit. As a result, people today are continuously coming up with new strategies to make the market work for them. One strategy that has been gaining popularity in the last couple of years is A.I.-powered algorithmic trading.

Algorithmic trading, or algo-trading, is a way of investing in stocks that relies on a mathematical model that executes specific actions automatically depending on certain preset conditions. For example, this model can check the prices of the pre-selected assets and make decisions based on that information at a speed that wouldn’t be possible for a human.

However, software engineers and professional traders developed a new branch of algo-trading based on A.I. It works by “feeding” millions of data points, including news, stock prices, and market trends, to an A.I. that can calculate a prediction of where the market is going.

In 2018, the quantitative hedge fund industry closed in with $1 trillion in assets under management thanks to algorithmic trading. Ever since A.I.-powered algo-trading has evolved from disruptive technology into mainstream technology, and it’s had a significant impact on the finance industry and traders’ finances. Here’s how.

A.I. Powered Algo-Trading’s Impact on Traders’ Performance

Trading is a complex process involving a deep understanding of the stock market and a bit of luck. However, algorithmic trading based on A.I. takes care of the “deep understanding” part as it can learn by itself and make decisions on its own with little to no input from a person.

This type of algorithmic trading eliminates various pain points that some traders have struggled with in the past. For example, an A.I. doesn’t second guess itself based on emotions, nor does it have to deal with a clunky interface or subject itself to the errors humans make when trading.

A.I. offers a method of accurately predicting the evolution of stock prices, automating transactions, and gaining an edge over the broader market. Big names like JP Morgan have implemented A.I. in a significant way, setting a precedent for others to follow.

A.I. is still in its infancy, though it’s clear that it will play a major role in how individuals go about managing their personal finances, regardless of where they live.

In Summary: A.I. is Here to Stay

Whether through chatbots, PFRs, or algorithmic trading, it’s clear that artificial intelligence is already changing the landscape of personal finance. With more firms jumping on the A.I. bandwagon every year, it’s safe to say that the A.I. trend will continue as the tech improves more over time.

Either way, the impact artificial intelligence has and will continue to have on personal finance cannot be overstated. Of course, this is but a glimpse of the most fundamental ways in which this tech is making things easier and better for people right now, but A.I. will continue to improve over time, and there’s no telling on what’s to come.

Image Credit: tara winstead; pexels; thank you!

Jordan Bishop

Jordan Bishop

Jordan Bishop is the founder of Yore Oyster, a site that helps you optimize your finances while living an international life. He recently published his first book, Unperfect, an exploration of problem solving.


Fintech Kennek raises $12.5M seed round to digitize lending



Google eyed for $2 billion Anthropic deal after major Amazon play

London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.

According to an Oct. 10 report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.

The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:

“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”

The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:

“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”

The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.

The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.

Featured Image Credit: Photo from; Thank you!

Radek Zielinski

Radek Zielinski is an experienced technology and financial journalist with a passion for cybersecurity and futurology.

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Fortune 500’s race for generative AI breakthroughs



Deanna Ritchie

As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.

Goldman Sachs’ Cautious Approach to Implementing Generative AI

In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.

According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.

One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.

To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.

Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.

Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

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UK seizes web3 opportunity simplifying crypto regulations



Deanna Ritchie

As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.

Streamlining Cryptocurrency Regulations for Innovation

To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.

The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.

Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.

The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.

Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

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