Seventy-seven percent of Americans report a feeling financially stressedMake personal finance of consumers an attractive market for new manufacturers. And yet the space houses dozens (if not hundreds) of startups that have help Their users, but could not fully transform their financial life.
For what? Historically, there has been a massive gap between consumer expectations for personal finance products and what these products can accomplish. Most digital personal financial managers (PFMS) have focused on redesign information about your money. At best, they help you learn more about new products or behaviors, which could help, if you go to time, efforts and expenses to follow (and maintain / rebalance over time).
Personal finance is a complicated subject and emotionally loaded, often in a negative way. Several studies have discovered that most people prefer to talk about any other subject – including sex or death – than their finances! Consumers do not want to spend more time thinking about their financial situation. They want someone to repair it for them and, even better, keep them on the right track with time.
Money on the automatic pilot
Thanks to the generating AI, the very discussed subject of “autonomous money” finally has a chance to reach its potential. Imagine a platform that can move your money to optimize your balance sheet. In the past, this was not possible from a technical point of view, because the products were stuck in “Read only” mode. They could generate information or analyzes, but could not act on your behalf, which is undoubtedly the most important step.
Thanks to the generating AI, the very discussed subject of “autonomous money” finally has a chance to reach its potential.
Post-generative, we are in a new world for consumer financial platforms. LLM, and specifically multimodal prompts like GPT-4, can deal with and get out of the text and images. This allows Robot Process Automation (RPA) to consume, which will allow Fintech applications to operate in the name of a user. This massively opens the universe of potential interactions with users with personal financing products in terms of two entries (which the product can analyze) and outputs (what the product does for the user).
For example: Google’s bard is able to ingest a screenshot of your investment account, “read” the start -up and end values (as well as deposits and withdrawals), and Calculate your compared investment returns on the larger market. Bard has only been online for four months, we therefore expect this functionality becoming more and more sophisticated over time.
Following this, we expect to see startups finally finish the vision of financial automation, with products that serve as “automatic drivers” to help consumers:
- Save and spend
- Make investments
- Plan retirement
- Manage debt
- Prepare / file taxes
- And more!
In addition to the drivers who optimize your assets in a category (for example, analyze and rebalance your actions on brokerage accounts), we can even see the rise great application In the United States, it would serve as an automatic pilot through All these product categories, allowing 100% “hands -free” management experience, which can transport money between your existing applications and accounts. Essentially, it becomes an accountant of AI and a wealth manager for the masses, which prepares you not only for success, but automatically realluches your money as your life changes.
Above all, consumers would not have to change providers – they could continue to use separate applications to invest, save, expenses, etc., the automatic driver providing an optimization layer on these applications.
Companies that succeed here will be different from everything we have seen in the finance of consumers before. In particular, they will not count on consumer engagement to offer value. In fact, the best products will have an incredibly fast and smooth integration and a movement “Set it and forget”, with a measured success on the quantity of their wallet or its wallet, a user puts it over time.
This is the start of a new series that we call “money on the automatic pilot”, where we will unpack how AI will transform consumer financing to all types of products. Although there is a possibility of disruption everywhere, we expect the AI first to reach the “strong friction of consumers” (painful to finish manually now) and the “judgment of low AI” ( Simple enough for AI to automate) product categories. Consumers will be motivated to try new products that resolve pain points here, while AI will be more likely to provide great experience.
First of all, we are going to take a look at what we call “refi robots” and how the refinancing of the debt can be rebuilt by AI.
Robots REFI
In 2015, our partner Alex Rampell describe A convincing vision of consumer financing. One of his big ideas was that the mobile portfolio would result in the undressing of consumer payments and consumer credit, potentially transforming debt from a painful process to a frame in one click. To date, this has failed because no credit card company has an incitement to allow this unbundling – it destroys one of their main profits in renewable debt.
A missing refinancing opportunity may not seem significant, but pay for some additional interest points in interest on an expensive purchase (such as a domestic mortgage, a student loan or a car loan). Interest rate offers can vary radically According to the lender and the market environment. If users could automatically change loan options, this could save them thousands (if not tens of thousands) dollars over time.
However, as a borrower, determine the refinancing options – and how much they will cost you – is a non -trivial task. It is a question of looking for service providers and their interest rates, to calculate the net advantage (incorporating original costs, penalties and closing costs), and finally, to submit refinancing requests. The result of this? According to a 2022 Survey YougovThe reason n ° 1 for which buyers do not refinance their mortgage is because they “are not sure that it is worth it”.
This is a question to which a generative AI can very easily answer – via what we call “refrigerated robots”, which act as screen scrapers (supercharged). They can connect to all your online accounts, find the cheapest REFI option for your debt and run the refinancing process for you. An AI could go so far as to complete requests, cancel accounts and come from it. This is a massive step of data aggregators from the past.
Why will a startup win here? This result will be extremely harmful to holders who benefit from ineffectiveness – now they are protected by high switching costs on the consumer side, because many borrowers do not know that they can save in refinancing, or do not want to go on the effort required to get there.
We see this potentially manifest in new products in different ways. There may be a “food -robot” consumption application, where consumers can connect their debt, add their personal identification information and let the magic occur. We also expect whatTo expose this automated referral capacity to their end users and take a tax on transactions. Finally, we could imagine a new type of real -time auction that runs, where credit facilities are in competition to acquire consumption debt.
If you work on a ROBOT ROBOT or on another idea of personal finance AI X – We would like to hear from you! Contact us at anish@a16z.com and omoore@a16z.com.