Three tools that put the power of predictive analytics into the hands of consumers

Experts in alternative finance need to keep abreast of current trends in personal finance technology in order to stay competitive.

Tech innovations shape consumer financial decisions, ultimately affecting everyone in the industry. There’s no doubt that predictive analytics, powered by big data and increasingly advanced artificial intelligence, is forming the foundation for the future of fintech.

The smart use of A.I. is integral to alternative finance. Predictive analytics consists of using A.I. with massive data sets to make predictions about the likelihood of specific outcomes. Technological innovators are transforming the fundamental nature of personal finance by providing consumers with a wide range of tools to put the power of predictive analytics into their hands:

Getting personal finance advice

Many consumers can’t afford the cost of regularly contacting a personal finance assistant. When it comes to making major financial decisions, creating a monthly budget, or finding ways to be more thrifty, individuals are often left to their own devices. In the past couple years, however, apps featuring A.I. personal finance assistants have begun to dramatically improve consumer access to financial advice.

As noted by Salon, these apps “use cloud-based artificial intelligence, predictive analysis and human-like messages to track consumers’ purchases … and update people in real time about their spending habits.” With each purchase, users can receive detailed information about how that transaction affects their monthly budget. If they have any questions, they can communicate with an AI assistant for personalized advice.

Some critics note that some A.I. personal assistant apps may not be sophisticated enough to provide trustworthy advice — or, worse, that such apps may have biases when it comes to referring consumers to specific financial products or services. Analysts with the University of Alabama at Birmingham point out that “ … (w)ith many new and novel ways for consumers and small businesses alike to acquire and manage financing, the question remains of how — and if — these digital, disruptive transactions and services should be regulated and monitored.” Until stringent regulations are in place, consumers should exercise caution when selecting a personal finance A.I. assistant app.

Predicting healthcare costs

Healthcare costs are a stress-inducing component of personal finances. Predictive analytics played a major role in healthcare in 2017, but perhaps more notable is how they have begun to affect individuals looking to predict (and even prevent) healthcare costs. As wearable health sensors, such as the Fitbit, grow in popularity, the public is gaining unprecedented regular insight into how their exercise and dietary choices can affect their health.

Huawei and Philips are taking this concept to the next level with a cloud-based healthcare solution for consumers in China. Using biosensors, cloud A.I. will be able to process a vast amount of data about consumers’ health. While this technology is still in development, the companies aim to provide users with impressive insights.

For example, they can use “voice analysis technology to identify stress, heart disease, or Alzheimer’s based on your vocal patterns; your steering wheel may be able to pick up on the onset of Parkinson’s disease from small tremors in your hands; or your shower or bath might be scanning you for tumors on a daily basis.” GPS-enabled wearables can even be used to protect those with specific illnesses, including dementia.

Not only can this inform consumers about worsening chronic conditions and help them anticipate medical costs, it can spur users to take preventative health measures, reducing related expenses. Wearable technology, in combination with predictive analytics, can give consumers medical advice with unparalleled speed and accuracy.

Stabilizing cryptocurrency markets

While the vast majority of the population are currently kicking themselves for missing out on profiting from the meteoric rise of the value of Bitcoin, you can hardly blame yourself; if there were reasons to feel confident about investing in the popular cryptocurrency, they sure weren’t obvious. How can consumers make informed decisions when it comes to cryptocurrency investments? How do you even value a cryptocurrency to begin with?

Again, predictive analytics may provide the answer. MIT Professor Alex Pentland, co-founder of the company Endor, is looking to leverage it to make cryptocurrency markets more accessible to consumers. The goal of his venture is to make these markets more predictable — and more profitable.

He aims to do this through “social physics,” which are, in his words, “ … the science of using statistics to find ‘laws’ or ‘universals’ in human crowd behaviour.”

A.I. can be used to analyze data about cryptocurrency trading, blockchain transactions data, as well as other variables, to provide users with data about the projected growth of specific cryptocurrencies. Armed with this information, more consumers will be able to enter this burgeoning world of investments with confidence.

As alternative finance leaders move forward, they need to keep the influence of these innovations in mind. Big data and A.I. are opening new doors for consumers every day, helping them make better financial decisions through predictive analytics. As A.I. transforms personal finance, savvy consumers and investors will need to take advantage of these cutting-edge innovations to maintain stability and achieve financial growth.