Transaction Data Enrichment, an Opportunity for Financial Wellness
In a recent financial wellness survey of American adults, 58% of respondents said they did not have the financial freedom to enjoy life. 48% said they were living paycheck to paycheck. Less than half said they were confident in their ability to absorb an unforeseen financial emergency.
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Needless to say, Americans have room to grow when it comes to financial wellness. And banks can help.
By enriching a consumer’s transaction data, banks can demystify data, making it easier for consumers to understand their own spending and saving patterns. But transaction information is often highly abbreviated, with ambiguous conventions that make it difficult for consumers to recognize their own transactions. It also lacks categorization, which challenges financial institutions and banks to organize, analyze, and effectively use data.
Transaction Data Enrichment (TDE) can empower consumers to receive personalized financial advice, from their financial institution. Envestnet|Yodlee’s TDE machine learning engine provides insights based on its findings from millions of transactions. It allows for the delivery of vital contextual information to customers. TDE’s accuracy and depth leads to an evolved user experience and the ability to make better financial recommendations for financial wellness.
TDE powered by artificial intelligence can scan the consumers’ past history and account balances to glean new information. Artificial intelligence/machine learning enables speedy and accurate analysis based on predicted transactional categories. Its self-learning capabilities allow constant analysis of billions of bank transactions. The use of structural modeling techniques also gives the required flexibility. Deep learning models and automated processes also learn while they perform. It would otherwise require exhaustive effort to go through and interpret the transactions manually.
New age financial wellness tools supported by AI-based enrichment mark a change in the way financial advice is delivered to consumers. Unlike earlier personal financial management tools, new generation tools give consumers actionable guidance needed to improve their financial health. For example, consumers may find it difficult to track transactions based on merchant identities based on how their names are displayed on their online banking platform. A simple example is Domino’s Pizza which could show up in transactions as either “pizzadom” or ‘domino.” TDE can help organize these merchant variations into a single “Domino’s Pizza” expense category. Such insights will help consumers understand if one must cut down their monthly expense on eating out. App-based systems will also reduce customer support calls to the bank.
The financial industry is witnessing a huge upswing in artificial intelligence technology to support the financial wellness of consumers. AI-based tools can help consumers deal with their day-to-day financial concerns, long-term budgeting or savings, and provide the tools necessary for a better financial future.
Editor’s Note: See Pramod’s talk “Transaction Data Enrichment and Alternative Data: An Opportunity for Business Growth and Risk Mitigation” at ODSC West 2019.