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How Big Data Will Help You Save Money

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If a gadget promised you that it could be your personal finance coach, would you listen to it? Is the world ready for the Fitbit of spending? Since 2012 Big Data and Internet of Things (IoT) have become buzzwords announcing essential changes in different business sectors, from healthcare to law enforcement. Banking and finances are no different and are ready to embrace the technological advancements. The investment in Big Data is growing every year and predicted to reach over $200 billion by 2020, making this a growing market.

Your digital footprint

Believe it or not, you are already part of the Big Data. Unless you live off the grid, every action you take in cyberspace leaves a digital footprint that can be traced back to you. On social media platforms this interaction is visible and highlighted, but in other areas, it is also present and carefully recorded.

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When you browse online shops, use your card to pay for merchandise, and even when you default your mortgage payments, everything is recorded and transformed into a digital portrait of your financial habits. By looking at some of these behaviors, a bank can assess the risk you represent when they grant you a personal loan (have a peek at these guys). This idea is as old as the FICO score and now is the first time you can use it to your advantage.

Behavioral algorithms

Banks have been recording transactions for the last 15-20 years. Now it is the time to put all that information in the clients’ service. The first step is to aggregate it, clean it and use it as training problems for specially designed algorithms. The goal is to identify the way people spend their money and create personalized advice about ways you can spend less, pay your bills on time and even grow a savings account.

Financial institutions are interested in helping you manage your money wisely. If you can follow a budget, that means less default risk. On the other hand, you should take full advantage of such tools that help you stay on track.

Just imagine that the next time you want to spend money on clothing items the app prompts you with the total amount you paid that month and asks you if you’re going to continue the process. In the same way, imagine that you would use a financial app linked to your bank account much like you can use a fitness app, setting goals and getting daily reminders and advice. All this is possible right now and the more data you allow the system to know about you, the more customized the recommendations.

Bank chatbots

Currently, a lot of banks are entering the second digital era by adopting the latest customer service technology, the chatbots. An excellent example is Erica, the tool developed by Bank of America. This bot can act both as a clerk and answer common questions about your account or help you pay bills, but it doubles as an adviser. By analyzing the way you spend money every month, it gives you hints about what you could do with extra cash, or when you should be more careful.
Some chatbots, like that offered by ImagineBank even use your geolocation to help you save money by offering you promotions and discounts in nearby places.

Pocket consultant

If you have a hard time staying on track with your finances, you are not alone and should not feel ashamed, over half of Americans have the same problem. Luckily, the technology is on your side, and with the help of deep learning, your consent to use personal data and some resilience, you could meet your obligations much easier.

As their natural language processing abilities increase, we can expect chatbots to become an integral part of our life and, for the first time, to have our own financial advisers, right in our pockets.

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