In recent decades, the rise of disruptive technologies—such as the Internet, broadband connectivity, and smartphones—fundamentally changed the landscape of personal finance and financial services. The next generation of innovation, including artificial intelligence (AI) and self-driving finance, may be similarly game-changing, a trend that accelerated due to COVID-19. People living on low and moderate incomes (LMI)—disproportionately Black, Latinx, and women—have typically been the last to benefit from technological revolutions. Their perspectives often are given consideration only in the end stages of innovation life cycles when there is little ability to fundamentally shape technology design and use.
The new report, Generative AI and Emerging Technology: Actionable Insights for Financial Service Providers, provides insights from Commonwealth’s 2023 national survey focused on understanding the usage of emerging technologies in digital consumer finance. It provides data on persistent uptake gaps based on income and highlights opportunities for generative AI and digital finance to meet the needs of households living on LMI. It also examines patterns of usage of chatbots and other emerging technologies to identify barriers and opportunities for these tools to better serve households living on LMI.
Using Advances in Technology to Expand High-Quality Services
Commonwealth is working to change how people earning LMI are considered within the development of emerging financial technologies. We bring together original research conducted with people living on LMI, an understanding of the needs of financial service providers, partnerships with industry actors for practical in-market testing, and strategic “inform and influence” work to change systems. This work brings attention to the perspectives of people living on LMI and the opportunities for effective use of technology to effect positive social and business change.
Often, lower-income market segments are deprioritized by financial service providers due to the balance between customer servicing costs and profit from low-balance accounts. However, major advancements in AI and other technologies, including transformative developments in generative AI, have opened the door to robust and personalized customer support at scale with significantly lower costs than traditional customer service channels. By reducing the cost of servicing customers at scale, these technologies create a much stronger business case for connecting with and servicing customers living on LMI. New entrants to the financial services market that take advantage of these advances have made significant headway; as these tools continue to be refined, they will continue to change the financial services landscape.
Actionable Insights for Financial Service Providers
The new report provides insights into the current state of usage and experiences with digital financial services and how these differ across demographic groups. The research findings, categorized into three focus areas— generative AI and chatbots, general digital financial services, and emerging technologies—provide actionable insights for financial service providers.
- People living on LMI represent a significant growth market for financial service providers that can meet their needs digitally given that there are persistent gaps in uptake of digital financial services by these households.
- A focus on mobile user experience and the design of new financial technologies like chatbots with a mobile-first approach is an important part of reaching households living on LMI, who are disproportionately Black and Latinx.
- Building awareness and designing with an understanding of what these users earning LMI need and want from a chatbot is key to improving uptake.
- Expanding chatbot capabilities to provide credit-building guidance and other more advanced forms of support will be a key competitive advantage in serving households living on LMI as the next generation of chatbots develops.
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 blog post is an edited version of the report’s executive summary.
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.