Understanding the technology
What is AI actually? Cognitive and intelligent automation lead for PwC Alistair Hofert believes the term AI is used loosely in discussions around the technology. He says: “The two most prevalent technologies I see under the AI umbrella are robotics and machine learning.”
Software robotics allows machines to do any repetitive task that has previously been performed by humans. “For example, if you asked me for a financial report for a business, and I want a financial statement for the last 12 months, that work can be done by a robot. It will physically log into the system, it will go in and follow a set of rules, like a human would, and you configure it,” Hofert explains.
Machine learning, on the other hand, allows robots to actively learn as they process data that is fed into their algorithms. This means robots can then not only crunch the numbers, but also begin to advise you on how to manage your finances.
What does this mean? Essentially that your finances can be managed by robotic technology, and that more and more of your communication with your financial institutions will be done through robots. Hofert explains: “Virtual agents are going to become massively significant.” You are no longer going to phone someone to advise you about your tax returns. “You will now have that conversation with a robot, augmented by a human.”
Understanding money and planning for a financial future require financial literacy. But in a new technological era, where artificial intelligence (AI) is becoming ubiquitous, will robots take over our personal and business finances?
As far-fetched as it may sound, this technology already exists. Virtual agents or chatbots are already among us. The most obvious ones are Siri or Alexa, the virtual know-it-alls behind Apple and Amazon’s digital assistants. And then there is that helpful voice that directs you when using Google Maps.
Here in South Africa, banking group Nedbank recently launched Pepper, a client-facing robot designed to deal with people at branch level. Deborah Fenton, Nedbank’s senior manager for requirements and robotics, believes technology like Pepper will massively assist consumers with managing their finances. She explains: “Technology will make dealing with finances and financial institutions more accessible. It will take away the stigma and fear around dealing with money.”
Managing your finances in an AI world
The more this technology develops, the more assistance people can expect from robotic helpers and advisors. Hofert says a search for personal finance applications will turn up 80 000 to 90 000 apps worldwide that could help people budget, save money, invest, pay bills and manage their tax affairs. The more advanced apps integrate with bank accounts and remind users when bills are due, of overspending and how better to save for a future expense.
This technology not only makes it easier for people keep track of their spending but, says Fenton, the technology becomes a very useful tool to help people become more financially literate. “This technology can guide people through financial processes, while making it easy to understand and more fun,” she says.
Furthermore, there will be a technology to suit every situation, whether it’s managing your R10 000 pay cheque or running a bank with branches in 20 countries. Hofert explains: “When it comes to business accountancy, there are about 30 robotics companies that work in that space. We actively design and implement these types of technologies to suit our client’s needs.” This adaptability means that there is probably already a robotic solution adapted to your specific needs.
A tool with limitations
AI, robotics and machine learning are only as good as the information fed into them. Hofert explains: “Algorithms and robots learn from humans, they can also learn from each other. They can display biases that can be anything, from incorrect calculations that are learnt, political bias, gender bias and misinformation.”
Fenton adds: “If a company captures a set of data incorrectly, their source data is essentially nonsense, and if you were to apply your algorithm it is going to distort a robot’s knowledge.”
For this reason both Hofert and Fenton urge users to not hand over total control of their finances to technology. Hofert says: “You can hand over your decision-making processes to a robot on *vanilla instruments, but there is a clear distinction between allowing AI to make the decision and merely augmenting it.”
Fenton adds: “Technology can look at historical data and calculate trends, but it is people who provide insights and advise businesses how to manage their personal and business finances into the future. Current robotics technology doesn’t have the ability to imagine and plan for the future in the way that humans do.”
In short: Although technology will go a long way in helping people compile a set of financial statements, manage their cash flow and pay their taxes, robots cannot advise you on the finer nuances of where you are headed in terms of securing your future. But for the day-to-day stuff, the Peppers of this world will certainly take the headache out of financial decision-making.
*Vanilla is the most basic or standard version of a financial instrument.