Artificial intelligence has been leveraged to solve countless challenges in recent years. The coronavirus crisis is putting the benefits of AI to the test. The Hill recently discussed this in its article “Enlisting AI in our war on coronavirus: Potential and pitfalls.”
One of the ways AI is helping people with the recent pandemic is by improving banking. AI is solving some pressing challenges in the banking sector, which is struggling to respond to the growing concerns about the virus.
How AI is Addressing Banking Challenges During the Coronavirus
The coronavirus pandemic has proved to be a very difficult time for businesses and households, with the impact of unemployment and loss of revenue exceeding any recession in recent history. The good news is that AI can be beneficial.
The World Economic Forum has said that AI is going to be very valuable in the fight against the coronavirus. However, our inputs are going to be key. The banking sector is a prime example of this.
Here are some ways it can help.
Machine learning helps bank apps plan shopping
While many households and companies will be tightening their purse strings, there are a number of products you can use and initiatives from the government and banks that can help you stay on top of cash flow in this unprecedented time. Machine learning algorithms help consumers track their spending and identify the right purchases to make, so they can save money.
AI helps you avoid high cost credit
AI also plays a very important in helping customers get access to the best rates for loans and lines of credit. A growing number of lenders are using AI to reduce interest rates for their customers. Some are even using AI to make them available for social media.
Where possible, you should avoid using things like short-term loans and other higher cost loans like logbook loans and such other financial scams during the crisis.
Whilst these types of finance can offer a fast and effective injection of cash, they can incur large fees for missed repayment and using top-ups can often lead to a debt spiral – as it has for thousands of Britons.
If you need to borrow money, consider asking family and friends who will likely charge zero interest or reaching out to your local credit union.
Budget more effectively
AI is also helping consumers make the best decisions with their purchases. Fusemap published an article on Medium about the role of AI in budgeting, which is a good primer for people that want to save money.
In these unpredictable times, budgeting has never been more important. Whilst we may continue earning well for the next month or two, we cannot be sure how long this will last.
Make a list of all your outgoings and consider making some short-term sacrifices such as paying for Sky packages or any other online subscriptions.
Make a list of meals that you plan to make over the coming weeks and avoid overspending on food where you can.
Use 0% overdrafts
AI is also helping consumers that are at risk of overdrawing their accounts. It conducts sensible actuarial analyses of its consumers with machine learning, so it can provide the right protections. One example is with 0% overdrafts.
British banks have agreed to freeze overdraft rates until the end of the June. These usually cost around 30% to 50% per month and are considered to be one of the highest forms of borrowing available.
Your overdraft allows you to borrow an emergency facility or go over your credit limit – and while this usually incurs fees, the high street banks have offered to waive this for the time being.
Your overdraft limit is based on multiple factors such as your income, credit status and repayment history – and it is something where you can request an increase. Usually the higher your income and better your credit record, the more you can borrow.
If you feel that having an overdraft could be useful, you can request an extension from your bank, but note that you will be required to pay this money back when the coronavirus settles.
Use mortgage payment holidays
In addition to overdrafts, high street banks have agreed to offer mortgage holidays for three-months to give homeowners some much needed breathing space.
This will be very useful to some households who are seeing a fall in their income as a result of coronavirus However, any outstanding amount will be carried on to the mortgage term and your bank may charge a fee for this convenience, so be sure to check the terms and conditions before you request a payment holiday.
Use balance transfer credit cards
If you have credit card debts outstanding and in a position now where you cannot afford repayment and the fees are starting to mount, consider using a 0% balance transfer card where you can move all the debt onto another card and pay 0% for up to 24 months.
This will help you save money on any interest incurred and also give you some time to get your finances in order once coronavirus has settled.
AI is Key to Solving Banking Issues
A growing number of banks are using AI. It is increasingly important during the coronavirus pandemic.