How AI Money Management Will Make You a Financial Genius (Without All the Hard Work)
Artificial Intelligence is here and it’s set to help us spend, save, and plan better.
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Imagine if 10 years ago someone told you that you could get personalized financial advice in a single click and use a machine to outperform the stock market. You might have thought they were from a different planet.
New AI money management tools, however, are making this dream a reality. Smart and secure, they’re set to become a major part of our everyday routine, from saving for that next big vacation to choosing which stocks to put our savings into.
But what will this smarter financial future look like in more detail? Let’s lift the cover of AI money management tools and look inside.
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Artificial intelligence is about to change the lives of millions of UAE citizens. Only China and North America will see a greater contribution to their economy than that of the UAE by 2030 (14%), according to research from PwC.
The UAE will be the third-largest beneficiary of AI technology by 2030
Source: PwC
The personal finance industry will be a major beneficiary of this growth, with generative AI in finance becoming an indispensable part of our financial toolkit.
Here are six ways AI will change how we conduct our daily financial affairs.
Imagine a wealth management firm where you can get detailed answers to your money questions 24/7, without ever having to wait on hold or schedule an appointment.
AI-powered chatbots are fast turning this fantasy into a reality with several real-life examples emerging around the world.
Alda AI is one of the most famous. The brainchild of AI specialists Consult Venture Partners, it uses IBM Watson technology to understand natural language and responds to inquiries just like a human expert.
Studies found that Alda answered a staggering 92% of user queries correctly, vastly improving the inaccuracies of basic chatbots. It could also provide uninterrupted service, so users could get an instant response at 2 PM or 2 AM if they needed it.
“A lot of people think that this is a live chat and that they are speaking to a live person” commented CVP co-founder Ashlea Atigolo.
AI models like Alda use machine learning to continuously learn and improve their responses.
It allows them to provide instant answers based on the specific questions asked and the user's financial background (if provided) so that the experience feels like a human conversation tailored to the individual. Think of ChatGPT but for money.
As the tech develops, more and more financial services are offering this advanced chatbot service to customers, so in just a few years we’ll see a significant shift towards personalized and accessible financial guidance for everyone.
AI is no longer science fiction in the world of investing. Research has shown that AI’s ability to identify market trends and make quick decisions means it’s a powerful investing tool.
Traders’ AI is a leading example of how AI can outperform traditional benchmarks. The model consistently fared better than the S&P 500 Monthly Equity Curve (its historical performance) over three years, more than doubling a $10,000 investment.
It achieved this by capitalizing on high-volatility days and even thriving during down markets (bear markets) compared to the S&P 500.
Interestingly, the model avoided taking positions on days with extreme volatility, possibly because it could anticipate high-risk events.
How AI outperformed the S&P 500 over three years
Source: CFA Institute
The next phase of AI investment promises even better returns, with advanced models creating investment strategies based on individual risk tolerance and financial goals.
It begs the question: will AI replace financial advisors?
Well, despite the promise described above, we should also remember that AI may not be the investment silver bullet we’re hoping for. Human expertise is also important for understanding complex market dynamics and emotional decision-making, so (for the foreseeable future at least), hybrid advisors, those that combine the two, look like the best option.
The nuts and bolts of AI money management will come down to organization, much like traditional financial housekeeping.
Disorganized paperwork, losing track of spending, and a lack of planning are centuries-old causes of financial difficulty, so they will continue to be.
The difference now is that AI will make it much easier for us to get our house in order. Here’s how.
Scrambling for banking logins and sifting through mountains of paper statements are major frustrations of everyday life, but AI (with your permission) will allow you to connect to all your bank accounts, credit cards, and investment portfolios to give you a single, clear view of your finances.
Overspending is a problem in the UAE. Lower-to-middle-income households spend between 34% and 52% of their salaries on housing expenses alone (well above the recommended 30% rate) and this puts a squeeze on other spending areas, like food and clothing.
This is where AI can step in to help us find out how to stop spending money carelessly. Its built-in analytics pinpoint areas where you’re and offer special recommendations to help you save.
It can also automate financial chores like budgeting and financial planning by creating a special plan to follow and even adjusting it automatically based on your spending patterns.
This way, you can focus on achieving your financial goals, not crunching numbers.
By taking care of the time-consuming tasks, AI frees you up to make smarter financial decisions. It's like having an AI personal finance assistant, always on hand to help you manage your money better.
AI already helps you with your online shopping. Every time you search for a flight, for example, you’ll get a curated list of options brought to you by smart algorithms.
Yet, this technology is set to ramp up significantly. We’re not far away from AI shopping assistants that not only present you with buying options, but also analyze historical data, predict price fluctuations, and even negotiate flight deals on your behalf.
It might also mean automatically finding the best price for that new pair of shoes you've been eyeing, or securing a discount on your hotel reservation.
AI money management tools could also track your spending habits across different retailers and suggest alternative, more budget-friendly options.
This, of course, has a knock-on effect on your savings. The better deals you find, the more money you’ll save.
The next step of the AI savings masterclass will be to help you save without thinking.
Automated savings plans will track your spending and lay out a saving strategy so you can reach your financial targets ‒ some AI-powered apps will even automatically round up your purchases to the nearest round number (i.e. 480 AED to 500 AED) and deposit the difference into your savings account for you.
These apps don’t just stop at auto-savings: many come with a whole host of features to help you keep your finances in order. These include “real-time notifications when you spend or save, offer insights into your spending habits and let you sort your money into virtual piggybanks”, according to Chris Collier, a contributor to UK-based finance website Money Saving Expert.
Suddenly, knowing how to save up money for a car or any other major expense becomes a lot easier – AI does it for you while you get on with your daily routine.
Much of the world’s inequality comes from an uneven financial system, which penalizes people for not having access to a bank account. This is a problem for 12% ofthe UAE’s population who are unable to open an account due to incomplete paperwork and complex application processes.
AI applications in finance, however, will bridge this gap. New data tools will look at things like mobile phone usage patterns, utility bill payments, or even social media activity to speed up applications and approve loans.
Opening a bank account will become an automated process where a bot will guide you through simple questions and use fingerprint or facial recognition to get you started in seconds. If any questions pop up, you can get an instant response.
A more inclusive financial system that empowers everyone to participate and build a secure financial future should be the goal for every developed nation – and AI technology is capable of helping us get there.
AI isn't just about making money management easier, it's about making it safer too.
We all sometimes have that nagging feeling that our financial safety is at risk when we use online financial services, but AI will help to dispel this.
First, AI algorithms can rapidly detect suspicious patterns caused by fraudulent activity by analyzing vast amounts of transaction data in real time. This allows for quicker intervention and helps protect your hard-earned money.
If you’re sick of remembering passwords, then AI is about to make smarter login technologies like facial recognition or voice authentication the norm, so that it’s almost impossible for criminals to hack into your account.
There will be new risks that come along, of course, such as the potential for AI systems themselves to be hacked or manipulated. But we can look forward to a much safer digital finance world than what we're used to by staying vigilant and adapting our security measures alongside this growing technology.
Ready to find out how AI can help to a better financial future? Download Maly’s money management platform today and take the first step toward smarter spending and saving today.
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