6 Ways AI is a-Bot to Transform the Financial Services Industry
Chatbots and artificial intelligence are transforming every industry, but their greatest influence may come in the finance services industry by helping raise consumers’ financial IQ and making smarter, more calculated decisions.
That is one position of Beerud Sheth, founder and CEO of San Francisco-based bot platform development firm Gupshup. He foresees the automation of day-to-day transactions, and the emergence of bots as intermediaries between humans and financial institutions, and robo advisors making autonomous financial decisions to maximize clients’ wealth.
“It’s obvious that a bot-powered meteor will shortly strike the financial services industry. Some firms will adapt, others will simply perish. It will be survival of the fittest. It’s time for financial firms to start adapting quickly,” Sheth said.
Beerud forecasted major bot innovation coming to financial industry, including:
1. Fintech bots will level the playing field for consumers and transform the industry. “The financial services industry is naturally ripe for disruption – because it is too important and too inefficient for the status quo to survive,” Sheth maintained. Financial organizations have considerable computing capabilities while human users have limited memory, compute and time. They miss payment deadlines, pay extra fees, and don’t optimize their investments, etc. Financial organizations benefit from sub-optimal human choices and often take advantage of human limitations. “Bots will arm the consumer with superpower capabilities and each consumer will be a power-user making optimal financial decisions that earn them more money and save them on fees and taxes.”
2. Bots are proactive, never reactive. Sheth suggested today’s financial world revolves around a collection of choices and due dates. financial institutions and brokers penalize customers that forget to pay bills on time or renew a policy. “Bots won’t forget things – they will never miss a deadline.” If the user can’t make a payment on time, bots will proactively make alternative arrangements.
3. Bots make it easier to keep track of finances and financial products. The more financial instruments created, the harder for consumers to keep track. Bots make it easy for consumers to find the right product. Bots can also help consumers stay on top of their financial history and status, provide daily or weekly summaries, respond to on-demand queries, and automatically create tax summaries.
4. Bots optimize earnings and savings. They will analyze every aspect of consumer finances to maximize earnings and minimize costs as well as optimize choices. The bot observes financial patterns and automatically moves money from checking to savings account to earn accountholders “free” money.
5. Bots can indeed earn and spend money. “Continuously maximizing financial outcomes requires keeping tracking of millions of constantly-changing financial data points to, say, rebalance your portfolio, increase or decrease credit exposure,” Sheth said. “It’s like drinking from a firehose.” However, bots can keep track of all that knowledge and autonomously make certain financial decisions automatically.
6. Bots will change the face of financial firms. The financial industry’s current points of contact are retail outlets, call centers, paper bills and email alerts. “Tomorrow, the touchpoint will be a bot that can text or talk with you like a human, with extensive personalization,” Sheth added. New emerging bot intermediaries automatically move money between accounts. With bots helping consumers, financial institutions and brokers can no longer rely on good margins derived from overwhelmed or distracted human customers. “Consumers are about to become more rational and smart; and the market is about to become much more efficient. Financial service firms will need to provide more innovation, better pricing, better services and more information,” Sheth insisted.