UBank has announced plans to use AI similar to fitness tracking apps to help address budgeting and saving problems for Australian consumers.
The technology, due to be launched late this year, will help customers track their daily spending and savings said Leo Hatton, UBank CEO.
“Our goal is to help our customers take control of their financial positions more closely so they can achieve their bigger dreams, including home ownership.”
Research by UBank found that two million Australians have less than $1,000 saved while 61 per cent don’t have a dedicated savings plan and 35 per cent are without a savings account. The bank also pointed to Galaxy Research showing Australians spend $31 billion intended for savings annually.
“Using AI, we will create an experience within our internet banking platform to help customers plan for ‘regular’ expenses such as monthly phone bills and also ‘irregular’ costs like car insurance, which need to be paid less frequently. With money set aside for these kinds of expenses, customers can then manage their daily spending allowance and savings plan more effectively.”
The development of the technology was informed by an experiment by UBank and Dr Phil Harris, a consumer neuroscience expert which tested 50 respondents, aged 22-50, on their thoughts on saving.
The experiment was divided into two parts, the first in which respondents answered questions about financial scenarios. The second section saw respondents presented with their ‘future self’ – an image manipulated to age the respondent by 10-20 years – and then answer more questions about financial scenarios.
“After interacting with visualisations of themselves later in life, 72 per cent of participants shifted their mindset towards wanting to save, versus spend money,” Dr Harris said.
He observed that by “being in touch” with future selves, respondents were more likely to choose to save money.
“When putting participants through the first round of financial scenarios, the results showed that it took a large sum of money to tempt people into depositing money versus spending it. But once they engaged with their future self, it took a significantly lower amount to tempt participants into wanting to save money.
“This shows that while our natural default setting is to seek immediate rewards, there is a way to train your brain to become financially smarter.”