Financial decisions by your artificial assistant
Our expert's opinion
"The Royal Bank of Canada has made an innovative decision concerning the savings of their clients. Nowadays, they have an artificial assistant, called NOMI, whom can make financial decisions for you. AI is not a gimmick, it is a real tool we need to keep in mind while building business. Handing over control to a machine is a bit tricky. Nevertheless, when financial situations are becoming more complicated, this tool can help you. Let's see how it is going to impact Canada and take actions when necessary."
- Yoram Ceelen, Associate Consultant
AI-Powered Bank Accounts Of Tomorrow Are Solving The Biggest Problem With Your Finances -- You
In Canada, millions of people are handing over control of their money.
Not to an expensive financial adviser or bank manager, but to the Royal Bank of Canada’s artificial assistant NOMI, which moves money around and makes decisions when to save on their behalf.
The idea of a machine making financial decisions for you might seem unsettling, but people don’t just like using NOMI, they seem to love it.
Now some of the world’s biggest banks believe autonomous banking is the future, and NOMI is just the start.
Israeli entrepreneur David Sosna predicted the rise of AI banking nearly 20 years ago.
He co-founded Personetics with the mission of building the kinds of smart features he believed banks would one day need.
“Rather than fighting against them, we were trying to find ways to help banks be as agile and intelligent as Google,” Sosna tells Forbes.
Today Personetics is going from strength to strength, developing the technology behind NOMI as well as the AI assistants of Romania’s Banca Transilvania, the Israel Discount Bank, Britain’s Metro Bank and digital challenger Tandem.
Personetics is starting by letting banks build AIs which analyze customer data for unusual spending patterns, identify spare money which could be saved or upcoming subscription payments which might leave someone overdrawn.
While some investment services like Betterment and Nutmeg have used algorithms to make investment decisions, this is the first time we’ve seen the same principles applied to current accounts.
“You can apply the same principles to a bank account as a driverless car—once we understand your goals, your obligations and your way of living, there's no reason why machines can't make the right decisions, or even better decisions than a person can,” says Sosna.
Indeed there’s a basic financial error that millions of us make every month, which AI could solve.
Killing off the nest egg
“You've got a credit card balance that you should pay off, but you also really want to have some savings—in that situation most people will make the wrong decision to save,” Bud CEO and co-founder Edward Maslaveckas tells Forbes.
Indeed the instinct to put money away as a nest egg is usually the wrong one, especially while savings interest rates are at a historic low and any money sitting in your current account is essentially losing value every day.
The reality is that it’s not a logical calculation, you’ve got that added complexity of behavior.”
Bud is the startup building the smarts behind HSBC’s artha AI app for its First Direct customers, which today lets them analyze spending across all their accounts.
“Through artha we'll soon start spotting whether you're on a variable tariff and maybe you'll consider switching your bills to save some money, then we can help you decide what to do with those savings,” says Maslaveckas.
But simple decisions like spending and saving are just the start, soon we might rely on artificial intelligence to make the biggest financial decisions of our lives.
Making the big decision
In the 1950s a current account, mortgage and pension were all most people needed—today add a student loan, a credit card, a Lifetime ISA, Monzo account, Revolut card holding multiple currencies, and an investment app like Moneybox or Wealthify, things start looking a little more complicated.
“Banking in general is not becoming easier, who is sitting down with excel sheets and really understanding what's going on in their finances?” asks Personetics’ Sosna.
The truth is that while the fintech revolution might market itself as simplifying our finances, in fact, more choice is only complicating matters.
“I think in three years machines will be making big financial decisions in our lives, it's just a question of when, not if.”
Are you ready to hand over control?