What Does AI Mean For Your Money?
Artificial intelligence, or AI, has been advancing rapidly in recent years, and its impact on our daily lives is expected to be significant. In this article, we take a closer look at how AI will affect your financial situation across a range of products and services.
AI is set to revolutionize the investment industry, much like electronic trading and the rise of the internet did in the past. It will provide new opportunities beyond cost reductions and efficiencies, such as equipping firms with tools to improve compliance and risk management functions, automate data analysis, and anticipate events.
AI can also help investors achieve outperformance by adopting AI-driven datasets. It can analyze a share’s economic history, assess what factors influence its performance, determine its riskiness, and potentially prevent investors from acting impulsively.
Robo-advisors are already providing a halfway house between DIY investing and full-blown financial advice. Add AI, and tailored advice will become the norm for many more people. AI’s capacity to help even more people build their wealth and achieve their financial goals is immense.
AI won’t change the basic principles of insurance, but it will change the way insurance companies work. AI assessments of how risky you are will play a bigger role in determining how much you’ll pay. The claims process will also be automated, with AI bots handling much of the communication. All this could lead to cost savings that would ideally cut our premiums.
However, it remains to be seen if this will become a reality. Rising premiums are already a concern, and even the power of AI is not an automatic fix for this problem. AI is also likely to interact with the Internet of Things to refine insurers’ knowledge of our risk profiles, raising issues of privacy and security.
AI could use vast amounts of financial data to identify a consumer’s credit card spending patterns and predict future financial behavior, such as a major purchase or even financial difficulty. This data could inform everything from the best type of credit card for a consumer to the most relevant offers and discounts presented in real time, catering to spending patterns and preferences.
AI could also determine a consumer’s eligibility for a credit card more accurately than the current system, which relies on credit reports held by third-party credit reference agencies. However, customer service at credit card providers may or may not improve under AI.
- The global AI market is set to reach $169.41 billion by 2025.
- AI is expected to lead to significant job disruption, with up to 47% of total U.S. employment at risk.
- The financial sector is investing heavily in the development of AI, with JPMorgan Chase recently announcing a $30 billion investment over five years.
AI has immense potential to transform the financial industry, providing new opportunities and cost savings. However, challenges such as job disruption, rising premiums, and privacy and security issues must be considered.
AI is already transforming the way we invest, seek insurance, and use credit cards. As it becomes more advanced, its impact on our finances will only increase. While the potential benefits of AI are clear, challenges and concerns cannot be ignored, and must be addressed as AI continues to shape our financial futures.