If you’ve been reading this blog long enough you’ll know that I’m a big fan of behavioural finance – that is, combining psychology and economics to help us understand why we make irrational decisions about money.
This relatively new field of study has produced ground breaking research and insight that has already made a big impact on how we save, spend, and invest our money.
Marketers and retailers have used behavioural psychology for decades to get consumers to spend more money. What’s exciting is that now, through technology, researchers and industry can design systems to help us save more, too.
We know that the more we have to think about saving the less likely it is we’ll actually do it. That’s why automatic savings programs work so well – money gets automatically whisked away into a savings account, TFSA or RRSP on payday before you even knew it was there. Out of sight, out of mind.
Automating your savings is a great start, but we make financial decisions on the daily that can’t just be put on autopilot. Can they?
Imagine if money management AND saving could be effortless, something that happens in the background while you were busy living your life?
Artificial Intelligence and Your Money
Enter AI, or artificial intelligence. When you think of AI, you likely have visions of Skynet, the self-aware intelligence system that took over the world in Terminator, or of IBM’s Watson, the question-answering, Jeopardy!-winning computer system.
One of the most promising areas for AI emergence is in the realm of personal finance. RBC was the first bank in Canada to offer clients personalized digital financial insights and a fully automated savings service with its NOMI Insights and NOMI Find & Save programs.
- NOMI Insights keeps an eye on your finances, helps you track spending, plan for upcoming expenses and gives you a heads-up when needed, such as an upcoming bill payment.
- NOMI Find & Save uses predictive technology to identify money in your cash flow that can be automatically saved.
- NOMI Find & Save launched in Fall 2017 and in its first year, helped clients find and save over $35 million. Clients who are actively using NOMI Find & Save are saving an average of $140 a month.
- New! NOMI Find & Save is now available to joint account holders, helping even more RBC clients automatically accelerate their savings.
This solves one of my biggest complaints about savings and budgeting apps – they’re great at showing you what you spent in the past, but not so helpful showing how you can allocate your money differently in the future.
FOMO on NOMI
I’m not an RBC banking client so I am a little bit jealous that I can’t access NOMI Insights and NOMI Find & Save to dig into my financial activity to identify trends, unusual activity and potential savings opportunities.
Not everyone’s like me – a huge budgeting nerd equipped with a 12-tab, 13-category, 78-item Excel spreadsheet dating back to 2008. What can I say; I’m a rare breed.
But even a die-hard, old-school budgeter like me would love to get my hands on the kinds of insights that artificial intelligence can offer through predictive technology and digital nudges.
Let’s say for example that life happens and your available balance might not cover upcoming payments. With NOMI Insights, you’ll get a reminder ahead of time so you know what’s coming up.
That’s handy for someone like me who gets paid once a month, but has several bills due, transfers to make, and post-dated cheques that could be cashed at any time.
You can rate each insight, which helps NOMI get smarter and deliver more helpful and relevant tips to keep you on top of your finances.
AI can also help with goal setting, which is essential for people trying to save up for a down payment on a home, a business, or another expense. For example, NOMI Insights may notice that you’ve been dining out more than usual in a given month, or your transportation costs have increased. A timely ‘nudge’ can help get you back on track or prevent more overspending.
NOMI Find & Save helps make saving simpler by using predictive technology to find pockets of money in your cash flow and automatically moving that money into savings. Automation FTW!
Most people are procrastinators and prefer to live for today rather than save for tomorrow. We know we need to save, but we maybe don’t have the time or awareness to know how and where to start.
We’re also subject to a number of biases and emotions that affect our decision-making. The best financial decisions are the usually most objective ones, since the end goal is often mathematical, i.e. lowest cost, or highest return. That gives a huge advantage to artificial intelligence, since of course algorithms aren’t subject to human emotions.
Finally, every year more of us rely on a mobile device to manage our day-to-day finances. Artificial intelligence, predictive technology, and digital nudges are all powerful tools that can help us save – working effortlessly in the background while we’re busy living our lives.
With a tool like NOMI, you’ve got a digital buddy telling you not to spend that extra $200 in your chequing account because the power bill is due in three days, or automatically shuffling $25 into your savings account when you underspend your grocery budget for the month.
Kudos to RBC for being the first to introduce AI to its clients to help them save more, spend wisely, and have a greater understanding of their everyday finances.
This post is sponsored by RBC. All expressed opinions and experiences are my own words.