Want savings advice? Where’s Wally?
‘AI algorithm will manipulate you into being the person you want to be. Horrifying’
Artificial intelligence (AI) is quickly changing the way we live. The technology is going to affect our finances in many ways.
Put simply, generative AI is intelligent computing. It’s not human, but can be programmed to simulate things humans do, such as give financial advice or analyse bank statements.
AI uses vast amounts of data and increasingly sophisticated computing power to learn. It can already reason to a degree if it’s programmed the right way. It can self-correct and be creative, such as through generating images or voices — more about that later.
“Robo-advice”, a type of AI, has been talked about for over a decade. This is where technology asks you questions and makes investing suggestions. That’s going to help a whole swathe of people who previously wouldn’t have taken, or couldn’t afford, professional financial advice.
Actual AI offerings in New Zealand currently are fairly basic. Nikko Asset Management’s goalsgetter.co.nz uses AI to help people create personalised goals, select managed funds and track progress. Others offering digital advice include BetterSaver, Kō ura Wealth and Milford
Asset Management. This technology has a long way to go and is just going to get better.
AI is also finding its way into a variety of personal finance apps offering smart budgeting and expense tracking. One example is Wally, a budgeting app that offers what it calls WallyGPT. It’s a chatbot service that will make personalised suggestions for you based on your own financial behaviour, which it tracks via the app. It is able to predict monthly expenses and create a savings plan.
On the spending front, there are apps overseas that can help people reduce their energy bills. If we did that here, it would be PowerSwitch on steroids. AI could be used with the likes of PriceMe and PriceSpy to automatically direct us to better shopping deals and scour the internet for discounts or rewards.
It can offer strategies to manage and pay down debt. In the near future, we will see AI approving loans and offering better credit scoring.
Eventually, more all-encompassing AI apps will emerge that can interact with our entire financial lives, helping us manage our budgeting, spending, debt banking, financial planning, investing, insurance and estate planning.
AI algorithms can analyse your past spending behaviour and preferences to suggest products or services tailored to your interests. This can enhance shopping. If I’m searching for something obscure I need to buy, then that’s great. But it can also put tempting stuff I don’t need in my way.
I heard psychologist Paul Duignan speaking about AI and social media at an event at Devonport Library. His thoughts about there being no “social media free lunch” rang a chord with me. The real cost of free social media is the bombardment of advertising. “At the moment, Facebook says, ‘I’m going to make you buy stuff’,” says Duignan.
“At some point, we’ll be able to pay to be in control of the algorithm. You will be able to say to it, ‘I want to save money’, or ‘I want to be better with the kids’,” says Duignan. “And then the algorithm which you’re paying for will manipulate you into being the person you want to be.” Horrifying.
Another thing that AI is starting to do — which isn’t good for consumers, in my humble opinion — is dynamic pricing. Instead of an item being sold at a fixed price, every user is shown a different price according to their emotional response to adverts.
The AI then creates the illusion of scarcity or urgency by generating limitedtime offers and promotions. These tactics can push us to make impulsive buying decisions.
AI can be positive or negative for our finances, and also downright scary. On the positive side, banks are already using AI to spot potentially fraudulent patterns or unusual account behaviour.
On the scary side, scammers are using AI to simulate voices.
Imagine this. You get a call from your “daughter”, who happens to be in Europe. It’s actually a scammer who has found a recording of your daughter’s voice in a clip on her TikTok channel.
Using that clip, the scammer fakes your daughter’s voice. You believe you’re speaking to your daughter, and she asks you to transfer a few thousand dollars to an account immediately.
As an aside, the way around this is to have a secret code word with family that your real daughter would know.
Finally, AI is coming. Being forewarned is being forearmed.