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Next-gen solutions for personal finance management

Artificial intelligence can draw up a budget and monitor income and spending closely to make sure millennial and Gen Z customers stick to their plan.

Oct 10, 2022 / Customer Experience

At nearly a quarter of the world’s population, millennials are the largest generation today and poised to inherit more wealth than any other in history. They are also the first generation of digital natives, and this has affected their expectations from banking and financial services.

In one survey, 50 percent of American millennials, as well as more than 40 percent of Gen Z respondents, found saving money very challenging. Despite needing help with managing their personal finances, research shows that millennials are not inclined to ask their banks for advice or, for that matter, even step into a branch. The independence of digital banking is clearly preferred as they seek transparency and control in their financial affairs.

In the past, it would have been impossible to meet such contradictory demands. But now, digital technology – and artificial intelligence, in particular – can empower millennials and Gen Z to make informed decisions so they can save, borrow, and invest better.

The last thing consumers need in today’s environment is high overdraft fees. So it is hardly surprising that some customers are leaving their traditional banks for next-gen, digital providers that have zero overdraft fees. While some banks may not be able to waive overdraft fees, they can recover lost ground by leveraging AI-powered analytical solutions to improve their understanding of customer cash flows and predict when an account is likely to be overdrawn. Based on insight into a customer’s spending pattern and scheduled expenses, banks can offer timely help in managing the account balance better to avoid overdraft charges.

AI can also automate savings with better results. An AI solution can draw up a budget, monitor income, and outgo closely to make sure the customer is sticking to the plan. And millennial and Gen Z consumers can fund a variety of purchases at low to no cost with AI-powered options such as buy now, pay later. AI processes consumer data in real-time to calculate credit risk, thus enabling the merchant to decide the terms of offering instant financing at the point of sale.

Being independent-minded, millennials want to take charge of their financial futures – starting now. But they are not interested in tediously researching various investment options, as they want quick answers.

Based on an individual investor’s goals, risk appetite and investible resources, AI algorithms can evaluate various investment instruments to create a personalized portfolio. Additionally, AI can automatically expand or rebalance the portfolio in response to changing customer contexts and market conditions. The customer has full visibility and control throughout, with the flexibility to intervene whenever required.

Conversational AI has improved far beyond past customer service chatbots and  is finding wide application in personal financial management. For example, banks have launched virtual assistants that can answer complex queries and even offer personalized assistance, and provide fraud monitoring.

Looking to the next generation, the leading-edge Gen Zers are just stepping into adulthood and their careers, and they are primarily looking at short-term financial planning. Many investment companies are employing robo-advisers to guide these individuals on the right savings options and even automate their savings activity. There are AI-powered apps that analyze a customer’s income and spending pattern, and after considering any impending expenses, automatically put some amount into savings.


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Going forward, it is understood that AI will play an increasingly influential role in personal financial management. Current trends indicate that algorithmic trading, portfolio management, and personalized recommendations will be among the most popular use cases over the next few years. With the ability to analyze massive quantities of data and spot even hidden correlations, AI trading platforms are managing risk and placing trades better than humans, especially in volatile conditions.

Apart from recommending “regular” investment opportunities to clients, AI algorithms will additionally enable the creation of niche options – such as wine investments, which are already in play – to provide better returns than traditional assets.

Fintechs and neobanks are in the driving seat when it comes to innovating AI-based personal financial management solutions particularly suited to the needs of millennial and Gen Z consumers. Many progressive incumbents have also adopted AI tools for helping customers manage their money better. Banks should act quickly to introduce AI-empowered financial management solutions or risk losing their future customers.

Dennis Gada is head of financial services, North America, at Infosys.