There are plenty of books and movies that tell of dystopias where robots rise up against mankind or where humans are already forced to serve their AI overlords. But that’s still a long way off from happening – if ever.
That’s not to say that people aren’t worried about artificial intelligence and the threats it could pose to our society. Could robots take over? Is AI smarter than us? Will we be expendable? Short answers: maybe, yes, no (let’s hope).
Many people are also concerned about what artificial intelligence will mean for their money. There’s no doubt that AI will impact our money in numerous ways, but as we’ll find out, it’s not necessarily all bad.
But before we jump into the five ways that AI will affect your money, a short explanation may be required.
It’s easy to throw around the term “AI”, but what is it exactly? In short, it’s the umbrella term for the theory and technologies that allows computers (or computer systems, more accurately) to perform actions that would normally require human intelligence. This includes the ability to learn from experiences.
Why is it such a big deal? AI can process a lot more data much more quickly and more accurately than humans can. This means that machines will be able to do a lot of work faster and with fewer errors, increasing efficiency significantly.
Lastly, there’s a common misconception to clear up: AI is not the same as robotics.
AI is the software and coding that can perform tasks that previously only human intelligence could perform. A robot is the machine that carries out tasks and needs to be controlled either by a person or by AI.
And now back to money…
1. AI is going to take your job
Let’s jump straight into the big one: AI will take away your job and, as a result, your income. This is one of the biggest fears that people have, especially those in jobs that rely on manual labour or repetition.
These jobs are ripe for the automation that AI can bring and many of them have either already been automated or are in the process of being automated. It’s said, for example, that 30% of human labour could be replaced by 2030.
But that’s not the only sector that’s sensing impending doom. Many office jobs are on the cusp of being automated, too. Roles in data entry and other administrative tasks could be filled by AI that has the advantage of being able to process more, faster and with fewer mistakes. After all, to err is human, not AI.
Even customer service, often thought to be a predominantly human endeavour, is being replaced by AI. While it will take some time for in-store or telephone customer service to be replaced, chatbots are gaining popularity in the online world.
Conclusion: AI will take your job and you’ll be left unemployed.
Except, not quite. A study by McKinsey found that while 45% of jobs could be automated, less than 5% could actually be fully automated. So instead of being replaced by AI, you may just need to get used to working alongside it.
Of course, if automation takes up a large portion of a job, then one person can take on more tasks. This means that there will still be less need for human employees than before. Will this result in mass unemployment and an increase in poverty?
In the long-term, it will most likely work out just fine. This is not the first time that the world has gone through a huge shift in labour. When Industrialisation hit in the 1800s, people had to adapt to a new way of working. Many craftsmen lost their jobs because a factory could produce the same item cheaper.
It is also natural for jobs to change and evolve based on technological advancements. Most of us aren’t doing the same jobs that people were doing 200 years ago, nor were those people doing the same jobs that people 200 years prior to that were doing.
Typically, though, a shift would happen more gradually. That’s why, in the short-term, we may have some hard times ahead of us, both financially and personally.
There are possible solutions to the money issue at least. A popular one is universal basic income, a policy where everyone would receive a minimum amount of money each month, regardless of employment status. However, there is currently no consensus on what this would look like in practice.
2. AI is going to make you rich
It might not actually make you rich, but AI could prove very useful if you want to invest money. As mentioned previously, AI is great at processing data.
And investment decisions and management are driven by data. But there is only so much data a person can view and absorb, so having AI by your side could prove beneficial. They can do all the data crunching and automatically adjust investment portfolios or give recommendations on what would or wouldn’t be a good investment.
There are a number of benefits to these so-called robo-advisors. Most importantly, it opens up the investment floor to a much wider audience. A robo-advisor service tends to be cheaper than employing a human wealth or asset manager and the initial investment amount can be much lower.
Additionally, recommendations or adjustments to portfolios are made based off of more data than a person could process and is therefore likely to be more accurate.
And for people who still prefer a human wealth manager, they may find that the wealth manager has time to help more clients because they’re not going through all the data themselves anymore.
3. AI will make you spend more money
While AI can be used for saving and investing, it can also be used to get you to spend more money. Data is king in many areas these days and it is definitely true in marketing, too. The more a marketing company knows about you, the better they can target you with products or services you may want to buy.
First, there is a move towards data driven marketing. This means that marketers start using insights gained from data collection that could come from various sources, from companies tracking user information and actions on their website to buying and selling data between companies.
And as before, where data is involved, AI is simply more efficient at processing, so it makes sense that AI would be employed here as well.
Second, the goal of data driven marketing is personalised advertising. The information you share about yourself can be used to figure out how you behave, what you want and use that to present you with products and services you may be interested in.
As more data is becoming available, it has become easier for AI to track and detect which ads or content will appeal to which customer rather than have a human marketer do it. Certain companies can go so far as to create multiple copies of the exact same web page and target each version towards specific users or demographics.
4. AI will help you manage your money
On a positive note, AI can also be used to help you manage your money. Over the past few years, there has been a rise in money management apps on the market that help people understand how they spend money and allow for users to create a budget.
However, managing money and a budget can still be rather daunting. That’s why these apps are looking into adding chatbots to their service as well to make information about managing finances more easily accessible.
The doors for AI and money management tools are still wide open and it is a field that both consumers and professionals should keep an eye on in the next few years.
5. AI will make your home smart
Smart homes may sound quite futuristic, but there are advances in this area and people seem excited. In 2018, the US had a revenue of $2,825m in the smart-home market and it’s forecast to keep rising. There are a large number of smart home options, but people are mostly buying technology for control, connectivity and security.
These technologies will monitor things like lighting and heating and automatically adjust based on various parameters, which you currently do have to set up yourself.
In the coming years, we can probably expect more gadgets to appear on the market for you to spend your money on, but can they also help you save?
While smart energy is meant to save you money and help with energy efficiency not just in your own home, but in your city as well, there are sceptics who don’t think much of current smart energy services. It’s a technology that may still need further development.