From Chatbots to Blockchain, how technology is changing the face of personal finance

By Alok Bansal

Personal finance is being transformed by cutting-edge technologies that make possible outstanding customer experiences, personalisation, and integrity of financial data. Increasingly, consumers expect financial services firms to have easy-to-use technologies that make interaction effortless, fruitful, and secure.

Consumers also expect financial services firms to cater to them like never before. They hope financial services firms to understand their needs and do their best to meet such needs without being asked.

At the heart of outstanding customer experiences, personalisation, and data security are technologies like AI, machine learning, and blockchain.

A few ways these technologies are transforming the face of personal finance are as follow:

Banks Have Chatbots & DVAs in their Arsenals

Digital Voice Assistants (DVAs) and chatbots have changed how customers interact with financial institutes. The AI powering DVAs and Chatbots have grown so sophisticated that many users are unable to differentiate between responses provided by DVAs and chatbots and those by people. Only the savviest users can usually make a differentiation.

Customers expect to be greeted by a chatbot at the bottom right corner of the screen when they visit a financial institution’s website. They hope to be able to have their queries resolved by typing a few simple questions. Most of the time, responses by chatbots are prompt and helpful. Yet, technology is still some way from completely replacing human customer support staff.

DVAs are a newer introduction. Unlike chatbots to which questions are input by text and which respond using text, DVAs are asked questions verbally and answer verbally.

A leading Swiss bank has incorporated its software into a popular Smart speaker. The software is sophisticated enough to offer financial advice and analysis of global financial markets. Furthermore, the software also serves as a teaching resource. Users can ask for definitions of financial terms and learn commonly used financial jargon. The bank’s DVA can also be used to connect customers with the bank’s financial advisor by telephone.

Gradually in the financial services industry, the customer service experience is becoming smoother with technology like AI. The technology facilitates easy interaction between customers and banks.

The technology behind DVAs is still unable to access individual portfolios, perform transactions like trades, or offer personalised advice based on a clients’ needs. Arguably the chief reason it is unable to do all of the above is due to security considerations. Once the technology becomes more secure, consumers may have access to a personal financial advisor that can offer sanguine financial advice tailor-made to the investor’s requirements.

Data Makes Personalisation Possible

Data is propelling the economy in 2020. It is the key to understanding customers and providing personalised experiences that excite them. More than any other type of organisation, banks have access to relevant consumer data. Such data comes from website analytics, consumer’s demographic information, and details about consumer’s online and offline purchases.

Machine learning makes it possible to use the data to build cogent consumer profiles. Unlike human beings, machine learning algorithms are powerful enough to collect data from disparate sources to create a reliable consumer profile.

Financial institutes are using machine learning to learn as much as possible about customers. Machine learning algorithms are powerful enough to recommend financial products at a time consumers are likeliest to buy them. They are also powerful enough to offer financial products at a price that most appeals to consumers.

Within a few years, personalisation may reach its next frontier when consumers negotiate the price of a financial product in real-time with machine learning algorithms.

Leading financial institutes are already using algorithms to cross-sell and up-sell productsto consumers who are likeliest to buy them. Such personalisation is making consumer experiences more seamless.

Today financial institutes are partnering with consumers by becoming intertwined in their lives.

Blockchain: A Secure Ledger

Financial institutes are using blockchain to make transactions completely secure. Most recognise blockchain as the technology behind Bitcoin. The security it provides to digital currencies is being used to create trust between trading partners.

With blockchain, a seller can sell products secure in the knowledge that payment has been received. A blockchain keeps track of every single transaction in a secure, immutable digital ledger. The number of copies ofa ledger numbers in thousands making it impossible for it to be compromised.

Blockchain Benefits Consumers

Blockchain is being used to transfer funds across national borders. Every year hundreds of billions of dollars are sent as remittances. The process has traditionally been convoluted and expensive. Blockchain has simplified it and made it less costly. What earlier happened by visiting a money transfer office, waiting in line, paying cash, and a fee of up to ten per cent using blockchain happens securely over a mobile phone.

Merchants that use blockchain stand to benefit immeasurably. They need not fear that a buyer will bounce a cheque. Consumers benefit from being able to track ownership of a product. Blockchain can also work as an escrow account by releasing ownership of a product once funds have been received.

The technologies mentioned above are ushering in a new era of personalisation in financial services. They will play a central role in the future and grow more robust over the next decade. Using these three technologies consumers will be able to interact with financial service providers intimately and be served by them with uncanny prescience. Furthermore, blockchain will eliminate the risk associated with financial transactions by ensuring all transactions are secure and incur minimal fees.

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