Chatbots poised to disrupt fintech industry

Peter Terlato 14 October 2016

chatbot

Artificial intelligence is changing and improving the ways we manage our money.

Research suggests Australians are ready to embrace fintech banking solutions, and the launch of three new London-based chatbot startups may be a sign the rest of the world is gearing up for a revolution too.

Artificial intelligence (AI) has been rapidly progressing over the past two decades, with machines reaching and exceeding human performance on an increasing number of tasks.

Just this week, the White House released a report entitled Preparing for the future of Artificial Intelligence, which describes the ways in which AI has and continues to yield new opportunities for progress in critical areas such as health, education, energy, and the environment.

Another important area of business, ripe for disruption, is finance and banking. People may soon turn to a robot rather than a real person for help preparing a tax return or managing their investments.

In Australia, almost half (47%) the population expect to use financial technology (fintech) services for 50% or more of their financial needs in five years' time.

The Australian Securities and Investments Commission (ASIC) thinks digital advice has the potential to be a convenient and low-cost option for those who may not otherwise seek advice.

These services will likely incorporate chatbots, similar to the trio of money-saving apps - Plum, Chip and Cleo - recently released in the United Kingdom.

Chatbots are programs designed to simulate an intelligent conversation with humans via audio or text.

This technology is particularly suited for mobile application, bringing chaos back into the way we use our mobile products. Chatbots have infinite scale and create more value to consumers than apps or messaging services alone, writes VentureBeat author SC Moatti.

Plum, for example, is an AI-powered Facebook chatbot, hailed as the first of its kind. It works by connecting to your bank account, learning how you spend money and then automatically deposits small amounts of cash into a separate Plum savings account every few days. The chatbot uses Facebook to interact with customers, informing them of new deposits, savings balances and investment milestones.

Chip works in much the same way, although rather than relying on an existing messaging app like Facebook, it communicates with users via its own iOS and Android applications. Customers can access their savings instantly with same day withdrawals and earn up to a 5% bonus for referring friends.

Cleo is a little different. It's a free intelligent assistant for your money. Cleo accesses your transaction history to deliver insights into your finances. You can ask Cleo questions about your spending and budget and, if you want, she'll also pro-actively help you to save money.

In July, a team of Australian behavioural finance and math experts launched the first ever robotic trading coach, PsyQuation, which runs a feedback alert system that points out costly trading mistakes.

Another company that's investigating how artificial intelligence and robotics can be better utilised in business is Aussie bank Westpac. Research is being conducted into the practicality of using bots to respond to customer queries.

For more information, news and weekly roundups of Australia's burgeoning fintech industry, check out our comprehensive guide to Australia's innovation landscape.

Latest fintech headlines

Picture: Shutterstock

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