Artificial Intelligence already helps us choose the right mortgage and fight fraud. But could you trust a robot to take control of your finances in the not-too-distant future?

Whether we like it or not, artificial intelligence (AI) is becoming a bigger and bigger part of our everyday lives – including the realm of personal finance.

So far, it has predominantly been employed behind the scenes, making administration quicker and smoother, and tracking down fraud.

RBS, for example, has rolled out a virtual assistant called Luvo for call centre staff: when a customer asks a question, the staff member can ask Luvo.

The rise of artificial intelligence

In the past year, however, its presence has moved from the back office to the front line, and we have started to see AI serving customers.

The technologists have identified three primary uses for AI, which constitute its biggest growth areas at the moment. First, it can store information and understand enough about language to use it to assist people. This led to the chatbot boom of 2016 and 2017.

It is something that the taxman has been working on, with the roll out of its chatbot, Ask Ruth.

It runs partly off a database, with rules: so if you ask when the deadline for filing your self-assessment tax return is, it notes you have includ ed the words ‘deadline, ‘filing’, ‘self-assessment’ and ‘tax return’ and answers ‘31 January’.

The sheer complexity of the tax system makes an AI tool invaluable, because it can remember rules, deadlines and exceptions that ordinary mortals couldn’t possibly hope to memorise.

In the world of investment, information storage and communication takes the form of robo-advice. Robot advisers can be programmed with facts and algorithms, so that by asking questions about how much money people have, how much they want it to grow, and their risk tolerance, it can identify suitable investments.

The second theme of AI development is the fact that it can gather more data than a human could manage, and learn how to apply it. We are in the early stages of development here.

AXA Insurance, for example, is experimenting with AI in the Hong Kong market. It uses data from wearable devices and mobile apps to complete a picture of our health and lifestyle: then it makes suggestions to improve it.

If, for example, it notices you are not sleeping for long enough, it will suggest more time in bed, and offer guidance on getting a good night’s sleep.

The idea over the long term is to connect lifestyle to tailored insurance – in much the same way as a telematics black box in the boot of your car.

People will then be able to improve their lifestyle for lower life and health insurance premiums.

The third area where we have seen a boom in AI in recent months is as a personal finance ‘assistant’. In recent decades we have been expected to get to grips with an increasingly complex financial world, take more responsibility, make more decisions, and keep on top of far more aspects of money management than ever before.

AI can learn all about these areas for us. It can provide the information we need to make decisions – or even make them for us.

Plum, for example, takes up the mantle of regular savings. It uses ‘contextual awareness’ to look at your spending habits and earning patterns, in order to determine what you are able to save. It then automatically transfers a sensible amount of cash into your savings account when it deems it to be appropriate.

The machine learning of the app comes into its own over time, as it learns more and more about you, and is able to tailor its services ever-more closely.

A US app called Clarity Money takes this one step further. It enables users to connect their accounts and credit cards, so it can analyse your income and spending. It will then recommend things that can improve your finances, such as like cancelling recurring subscriptions or getting a better credit card.

Geraldine McBride, founder of mywave, says: “Personal finance has always been limited by the huge amount of data required from multiple sources and the onus on the individual to keep them up to date.

“This is where AI excels in being able to analyse data, pull data from multiple sources and create a responsive budget in real time.”

“Suddenly instead of going into overdraft or realising you’ve spent a bit too much at the end of the month, your intelligent agent can let you know that you are overspending, and suggest ways of cutting back to reach your goal at the end of the month.”

Handing over responsibility

Instead of just providing nudges and recommendations, you can specifically task AI to keep on top of an entire area of your finances. Myia, produced by MyWave, arrived in the UK last year, having learned the energy market.

“If you sign up, it regularly scours the market for the cheapest energy deal – based on your use – and then lets you know if you can save by switching.

If you tell it that you want to change – it will then complete the switch for you. If you switch to a fixed tariff for a specific period, it will carry out its next search as your tariff is coming to an end. It will continue searching and switching until you tell it to stop, so you can always get the best deal without the effort.

McBride has now turned her attention to money management.

She says: “We … are working with major banks and financial institutions in the UK to enable next generation personal finance.”

Are robots about to replace humans?

McBride says AI is still in the early stages, and as such is not yet able to replace humans. She explains: “I don’t believe the AI industry is there yet.  AI systems currently are good at handling the standard interactions and then can triage to human advisors when the time is right.”

However, she adds that the ability of AI to handle complex scenarios without humans will come “in the not too distant future”.

One breakthrough that will make a major difference is connectivity: so every aspect of your personal finances will be connected, and transactions will become seamless. It will also connect to the internet of things.

Take, for example, the person whose energy bill has gone up and is no longer affordable. First AI can ensure you are paying by direct debit for a better deal.

Then it can shop around, and switch to a cheaper offer, and if that doesn’t save enough, it can communicate with the technology in your home to turn the thermostat down.

Unfortunately, we will have to wait a while for full connectivity. The technology needs to develop, and as McBride warns: “There will also be a number of regulatory hurdles to overcome.”

We also need people to be ready to hand over responsibility for their finances to a robot, and to have enough confidence in their security. This is an area developers are pouring significant resources into.

McBride says: “Nothing is completely impenetrable. However, given the customer concerns around data privacy and security, most modern data strategies are secure by design and are encrypted at rest and in flight.

“We have taken the approach that the customer owns their own data, we don’t sell it on and provide the customer consent receipts whenever we share data to get them an outcome they have requested.”

While developers are beefing up security to build confidence, the gradual growth of AI in all walks of life, is breaking down barriers by stealth.

AI is part of everyday life for millions of people. If you have ever told Alexa to play some Bananarama, asked Siri when Mother’s Day is, or watched a film recommended by Netflix, you are one of those people.

It may therefore only be a matter of time before a robot butler handles every aspect of your finances. Then all we’ll have left to worry about is whether we will be able to source the perfect leather coat in time for the rise of the machines.