Disruptive technologies such as the Internet, broadband connectivity, and smartphones have fundamentally changed the landscape of personal finance and financial services over the past several decades, and a new generation of innovation in the form of artificial intelligence (AI) and self-driving finance may be similarly game-changing. Historically, these technologies have served to widen the racial and income gap in financial services; the perspectives of people living on low and moderate incomes (LMI)–disproportionately Black, Latinx, and women–have often not been considered until the end stages of innovation life cycles when there is little ability to fundamentally shape technology design and use.
Commonwealth’s new report, Generative AI and Emerging Technology: Actionable Insights for Financial Service Providers, written with support from JPMorgan Chase, contains findings from a survey of more than 3,000 people nationwide and is focused on understanding the usage of emerging technologies in digital consumer finance. Commonwealth’s report identifies key disparities and critical opportunities for designing technology solutions to better meet the needs of underserved markets, with a special focus on opportunities for generative AI and chatbots.
Overall, the use of digital financial services continues to grow, but less so for people in the United States living on LMI. In our survey, 76% of respondents said they used a mobile app or website for financial services daily or weekly, but high-income individuals were more likely to do so than low-income respondents. While uptake is growing rapidly and indicates a growth opportunity for financial services providers, significant usage gaps still exist based on income.
“Our work is focused on ensuring emerging financial technologies serve everyone well. By bringing together this original research, our deep understanding of financial services providers, partnerships with industry actors for practical in-market testing, and strategic ‘inform and influence’ work to change systems, we have an opportunity to use technology to effect positive social and business change.”
Timothy Flacke, Commonwealth co-founder and executive director.
An opportunity for generative AI and chatbots to close the usage gap, provide personalized services
The report shows that even as consumers earning lower incomes have less access to in-person banking, they are significantly more likely to want to talk to someone directly for banking support. This demonstrates a clear gap between want and access–and an opportunity for banks to bridge the gap with technology including generative conversational AI and chatbots.
While a majority of people living in the U.S. have interacted with chatbots online, less than a third have used them for banking–and in either case, households living on LMI are less likely to have used a chatbot. Further, chatbots continue to be used primarily for account information and problem solving, rather than facilitating banking activities like sending payments or applying for loans.
With advances in generative AI, a new generation of chatbots is emerging that can converse with customers in a personalized way and potentially become more integrated with facilitating financial actions rather than just providing information. As these advanced chatbots are developed, a focus on how they can provide support like a teller and respond to complex action requests will be key to ensuring they provide maximum benefit.
Security and privacy remain top concerns for consumers
Awareness of emerging technologies is growing rapidly across consumers; about three-quarters of people living in the U.S. have heard of recent financial technologies being applied in consumer finance. However, only a quarter have used them, suggesting that uptake will require both increasing awareness for some consumers and moving from awareness to usage for others.
Concerns about security and privacy remain significant barriers to uptake, with a majority of respondents citing them as top concerns when engaging with financial chatbots. Understanding how to build trust through messaging, branding, and transparency will be key to the successful implementation of the next generation of chatbots.
People living on lower incomes express the most interest in digital financial tools that provide recommendations for improving their credit scores or saving money. As next-gen chatbots are developed, financial services providers have an opportunity to expand their capabilities to offer credit-building guidance and other forms of advanced support to ensure these customer needs are met.
Conclusion
The national survey conducted for this report provides valuable new data on how people living in the U.S. today are engaging with digital financial services, including emerging technologies like chatbots. It builds upon our earlier national survey of 1,200 people living on LMI before and after the COVID-19 pandemic. That research identified the growing use of and trust in chatbots and financial apps throughout the pandemic by this group.
For related reading, Commonwealth’s Financial AI for Good Guide & Chatbot provides design guidance for financial institutions and other organizations that offer financial services to populations living on LMI using emerging technologies like conversational AI (chatbots) and automated financial management software. You may also explore additional research from our Emerging Tech for All Initiative including the recent report, Perspectives on Emerging Technologies and Inclusive Design: Interviewing Bank and Investing Platform Executives.
If you are interested in working with Commonwealth to continue building this body of impactful research focused on emerging technologies, please reach out to Charles De La Cruz at info@buildcommonwealth.org to learn more.
This work is supported by JPMorgan Chase & Co. The views and opinions expressed in the report are those of the authors and do not necessarily reflect the views and opinions of JPMorgan Chase & Co. or its affiliates.