How Account Aggregators and Generative AI Can Transform Financial Advisory Services
Updated on Jun 8, 2023
The financial advisory industry is ripe for disruption. Traditional financial advisors are expensive and often inaccessible to the average person. In addition, they often rely on outdated methods and tools that are not well-suited to the needs of today’s digital-savvy consumers.
Account aggregators and generative AI are two technologies that have the potential to transform the financial advisory industry. Account aggregators allow individuals to securely share their financial data with financial advisors, while generative AI can be used to analyze this data and provide personalized financial advice.
How Account Aggregators Work
Account aggregators help individuals to securely share their financial data with financial advisors. This data can include bank account balances, investment holdings, and insurance policies. Account aggregators make it for financial advisors to gather clients’ data across multiple asset classes without laborious manual processes to fetch, process, and analyse these data – often with delays, errors, and chances of leakages
How Generative AI Works
Generative AI is a type of artificial intelligence that can be used to create new data. This data can be in the form of text, images, or audio. Generative AI can be used to generate personalized financial advice by analyzing an individual’s financial data and identifying patterns and trends.
How Account Aggregators and Generative AI Can Work Together
Account aggregators and generative AI can work together to provide personalized financial advice to individuals. By combining the data from account aggregators with the insights of generative AI, financial advisors can provide advice that is tailored to the specific needs of each individual.
For example, a financial advisor could use account aggregator data to fetch a client’s financial data quickly, accurately, and safely. The advisor could then use generative AI to analyse the individual’s financial data and identify strategies for achieving her goals.
Account aggregators and generative AI can also be used to provide financial advice in real time. For example, a financial advisor could use account aggregator data to track an individual’s spending habits. If the advisor sees that the individual is spending more than they earn, the advisor could use generative AI to highlight the costs of borrowing and suggest alternatives to avoid these costs.
The Benefits of Using Account Aggregators and Generative AI for Financial Advice
There are several benefits to using account aggregators and generative AI for financial advice. First, account aggregators can remove the friction and costs in fetching and processing data manually. Second, Generative AI can spot patterns in these data at scale and deliver specific signals and nudges for an individual. Third, these technologies can drastically reduce transaction costs thereby making financial advisory services less elitist and more affordable for the masses.
The Challenges of Using Account Aggregators and Generative AI for Financial Advice
There are also some challenges to using account aggregators and generative AI for financial advice. First, these technologies are still in their early stages of development. Advisors will need to invest the time and trained technical resources to evolve their practices as the technologies improve. Second, the algorithms behind Generative AI models tend to be opaque; human experts will need to supervise and correct the outputs of these models to make sure that clients’ interests are safeguarded. Third, with great data comes great responsibility: advisors will need to be ready to comply with upcoming Privacy and Data Protection guidelines which periodic audits and can impose huge penalties for non-compliance.
The Future of Financial Advisory Services
Account aggregators and generative AI are two technologies that have the potential to transform the financial advisory industry. These technologies can help financial advisors provide more personalized, efficient, and affordable advice to individuals. As these technologies continue to develop, it is likely that they will become increasingly common in the financial advisory industry.
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