How can AI support better financial wellbeing for employees?

The last couple of years have been challenging for many people’s financial wellbeing – with continual sharp increases in the cost of living and interest rates  affecting mortgages and other debt.

Could the ongoing developments in artificial intelligence (AI) be used to improve financial wellbeing? I have set out key areas where I think AI could move the dial even further than we’ve seen already. I’ve also considered some of the potential risks and the role employers can play in mitigating these.

AI has a role to play in all four pillars of financial wellbeing: knowledge, confidence, capability and resilience. 

How can AI help to build financial knowledge and literacy?

Finance can be a bit overwhelming: many people struggle to know where to go to find relevant and accurate answers to questions around key financial decisions.

AI such as ChatGPT has shaken things up and gained widespread attention for its ability to explain complex matters in layperson’s terms. It’s easy to see how this could be harnessed so people understand the basics of managing their money, using language that is tailored to their own degree of understanding and personal circumstances. We have already seen a range of products emerge to address this need and these will keep learning and evolving over time.

Can AI support financial confidence and smarter money management?

Saving money and being smart with spending can also be a challenge, but AI can lend a helping hand here too. Tools and apps already exist which can analyse an individual’s income and spending patterns and help with budgeting. 

Generative AI could supercharge these tools by 'learning' about patterns of behaviour and tailoring the advice accordingly, as well as by accessing data on e.g. savings or current account products across the market to proactively recommend the best solution for your financial circumstances.

How can AI help people to develop financial capability?

AI can go further and support increased financial capability. We are also starting to see the emergence of AI-powered financial advice services. These may be automated or may be delivered by an AI-assisted human.

This holds out the exciting prospect of making personalised financial guidance accessible to a broader audience and at a lower cost than before. However, it also raises significant questions about how such advice is regulated and how customers can be protected.

How can AI help to build financial resilience?

Financial resilience means having the right skills and protections in place to withstand financial shocks and make good decisions in difficult circumstances. For organisations, having a financially resilient workforce will help reduce stress and anxiety as well as improve productivity.

AI already plays a role in e.g. flagging patterns indicative of fraudulent bank account activity. In the future AI may also have a role here in identifying patterns of behaviour which suggests vulnerable consumer status, enabling the financial institution to provide support meeting the customer’s specific needs.

What are the risks of AI?

Much has been written about the potential use of AI by sophisticated scammers. There have already been instances of financial scams using AI, including 'deepfake' videos of the personal finance campaigner Martin Lewis supposedly selling speculative investments amongst other well known figures.

All of this means that it may become very hard for consumers to tell the difference between genuine financial information and sophisticated, harmful fabrications.

How employers can support employees and reduce risk of financial harm

Employers could play a major role in combating the risks of financial harm to consumers in this post-truth world. They can do this by providing access to financial services, guidance and advice which have been through their own vetting process and in which employees can, therefore, place appropriate trust.

Employees already trust their employers to pay their salary and provide a whole host of benefits, so it seems a natural extension for employers to play a role in providing a safe gateway to financial services and advice. For employers, this could also be a valuable tool for attracting and retaining staff.

This is just another example of how, in an AI-enabled world, the human connection (in this case the trusted relationship between employee and employer) will be more important than ever.

Where to hear more

To find out more, you can catch me on episode 4 of our ‘Beyond Curious with LCP’ podcast or read our latest employee wellbeing report.