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Will AI Help Wall Street or Main Street?

By David Sosna

Up to a third of the jobs in the United States could be replaced by automation by 2030, according to a recent report from consultancy PwC. Statistics such as these have caused fear in many quarters – particularly in the manufacturing, automotive and retail sectors – where replacing repetitive human tasks with some form of artificial intelligence often boosts productivity for business owners at the expense of workers. This is backed up by a recent report from the Cornerstone Capital Group that revealed robots could threaten another 6 million retail jobs.

It’s not all bad news for Main Street

While it’s true that the many new forms of AI will significantly disrupt the workplace, it’s not all bad news for Main Street. There is no denying that the transition from human workers towards greater automation and AI capabilities is impacting the financial sector – some estimate the shift towards digital banking and increased automation could put as many as 30 percent of bank jobs in jeopardy. Yet it’s impossible to ignore the positive impact that AI can have on huge swathes of Main Street customers.

AI-powered chatbots are already helping financial institutions provide better service to time-strapped customers, speed up the resolution of queries and streamline administrative tasks such as onboarding new customers.

These AI-powered chatbots don’t just regurgitate stilted scripts, but instead combine natural language processing and real-time analytics to better understand the context of the conversation, from simple password resets to offering personalized savings advice based on a customer’s financial position.

Personalized advice – not just for the well off

Using insights based on predictive analytics allows banks to deliver personalized guidance at scale – for example, helping customers take control of their finances by highlighting out-of-date subscriptions (more than 1 million people in the US pay for a dial-up service they no longer use) and redundant transactions.

These capabilities allow banks to prompt customers to take action in a more timely manner. For example, UK mobile-only bank Monzo uses geo-location tracking to understand when customers are abroad so they’re able to keep an eye on the latest exchange rates and ensure their card isn’t blocked.

AI can also provide personalized information such as whether the customer is able to withdraw cash while they’re abroad, which credit or debit cards are most cost-effective to use, what their daily limits are, and what fees they would incur for using different cards. When they’re back home, the data offers a detailed breakdown of all their travel spending and provides helpful life hacks, such as a reminder to book their next trip in advance.

While much of this information can be derived without the power of AI, the technology is instrumental to delivering a personalized experience at scale – deciding which bit of information would be most valuable and relevant to each individual at any given time.

Improving financial wellbeing for Main Street customers

As AI continues to take hold of the financial industry, it is paving the way for more sophisticated and personalized financial advice, which was previously the province of high net worth customers and private banking services. With 57 percent of Americans struggling financially, many customers who have limited time and resources available to improve their financial situation would welcome AI-powered financial advice. Cognitive banking now allows banks to help these customers by removing the burden of financial management tasks, acting on behalf of the customer to help them achieve their financial objectives.

For example, by analyzing individual cash flow patterns, banks can suggest whether customers are able to save more, and even set up an automated program to support personalized savings goals, automatically adjusting the amount (within agreed parameters) up or down in line with changes in current finances.

Such individualized savings programs are far more sophisticated and effective than traditional auto-savings programs such as Bank of America’s “Keep the Change” or fixed-amount transfers.  AI-based financial advice can act like a “personalized digital CFO” – suggested Eddy Ortiz, Royal Bank of Canada’s VP of solution acceleration and integration – guiding consumers towards improving their financial wellbeing.

Will these benefits be enough to offset the risk of job losses looming over Main Street brought about by AI? Time will tell, but there is good reason to believe that AI is quite a long way from completely taking over. More likely, it will be supplementing human interactions, streamlining financial decisions and removing the friction from day-to-day banking, at least in the near-term.

NOTE: Author David Sosna is co-founder and CEO of Personetics.

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