What the Aflac Duck Shows Us About Artificial Intelligence in Your Money Life

By Dan Kadlec

November 2, 2017

Aflac duck takes on financial literacy

DALLAS—The lovable Aflac duck went interactive this week and will now answer questions 24-7 about personal insurance needs. Of course, the duck doesn’t really know anything about you. But it learns as you ask questions, making a “DuckChat” the latest step toward artificial intelligence taking control of our finances.

Don’t hand off your money to the machines just yet. But the day is coming when AI will deliver better financial outcomes for millions of people. AI “Lite” is already making a difference by ramping up digital access for underserved communities. (More on that below.) It’s also proving useful for things like organizing accounts, automating saving and comparison shopping.

But true AI—machine learning that leads to automatic smart money decisions—is the Holy Grail. This was top of mind with speakers and exhibitors here last week for Fincon17, a gathering of money bloggers. Fintech companies were all over the joint.

One day you won’t have to wonder about the optimal time to take Social Security benefits, asserted Lynnette Khalfani-Cox, known as The Money Coach. You will simply ask Alexa, the Amazon chatbot in full possession of the details surrounding your savings, income, health, family and estate plan. Alexa will give a precise age to trigger the benefit. No research. No muss. No fuss.

Cinch Financial wants you to hand over your personal information and $4.99 a month. Then, the Cinch app will tell you how much to save, which credit cards to pay first, where to find the best mortgage, what you should be paying for car insurance, and so on. Cinch uses AI to analyze personal money data and recommend financial strategies as well as behavioral changes. It also recommends new financial products that fit with your behaviors.

At the conference, 10 fintech startups competed for prize money in a Shark Tank-like fashion. About half of the companies boasted data analysis that lead users to better outcomes. App builders Budgit and Squeeze were in the mix; they analyze spending patterns and guide users to the smartest purchases. Another entrant, Take Command Health, analyzes personal data and leads you to the best health plan choice.

This is all very promising. But it brings me back to Aflac, which debuted its new artificial intelligence—not at Fincon17—but in a prime-time commercial on network TV. It calls the service DuckChat, which consumers access through Facebook messenger.

Designed to help workers choose wisely during benefits open enrollment, under way now at many companies, DuckChat allows you to ask any insurance question you want, whenever you want. The duck responds immediately and mimics human learning, Aflac says. The more questions you ask the smarter the duck becomes and the better the answers.

I tried out the duck and found the experience…

• • •

…less than satisfying. I asked a simple question: Do I need life insurance? I expected the duck to fire back at me, asking how old I am and whether I have dependents. What I got instead was a kind of commercial asking if I’d like to know more about Aflac. That struck me as artificial—but definitely not intelligent.

An excerpt from my DuckChat

Maybe if I had stayed with it longer I could have cajoled some real information out of the duck. But my guess is that AI isn’t quite there yet in the area of personal finance—or if it is, some companies are throwing around the buzzy term to get attention when what they offer isn’t really AI at all, just an automated personal assistant.

Which is my way of saying be careful. Fintech is changing personal finance in many ways. Teachers, parents, and human resources departments need to watch this revolution. The Acorns app makes saving automatic. LendEDU makes student loan refinancing easier. Venmo is part of the coming cashless society, which will have losers but is a step toward giving more people access to modern money tools.

AI is next. But even when it works, it will work best for those with a solid idea of how to manage their money. You can’t just punt on financial literacy and expect Alexa or some other bot to figure everything out. The information you put into the machine is what determines what comes out.

Certainly, computers can gather your personal data and make decisions based on historical patterns. But what if the future is different from the past? What if your goals change? You do not want to become overconfident in a flawed system.

AI will gradually replace humans in functions like personal assistants and digital labor, PwC concluded in a study last year. But challenges to full-on AI will persist because of privacy, trust, and regulatory concerns, PwC said. In other words, we aren’t quite there.

How Financial Inclusion Via Technology is Boosting Global Prosperity

When underbanked people first get access to modern financial tools through their mobile phone they save more and pay bills in a timelier way, research shows. This is part of the broad benefit of digital financial tools.

“The world is getting better at understanding the mechanics of financial inclusion,” Mark Suzman at the Bill & Melinda Gates Foundation, writes in Eco-Business, which is focused on sustainability issues in Asia. “This is great news for the unbanked.”

Access to modern financial tools makes it easier to focus on work or a small business, which leads to greater income, Suzman says. Promoting financial inclusion is one way to grow local economies and boost global prosperity.

Financial access key to boosting micro businesses

About 2.5 billion people globally live without basic financial services. With a mobile phone, they would have access to the larger financial world even if they live in a remote part of the world. A McKinsey study found that broad access to digital financial tools could increase developing countries’ GDP by $3.7 trillion by 2025. That’s larger than all the economies of Africa combined and would create up to 95 million jobs.

Developing nations are making a big bet on mobile wallets as part of their financial literacy strategies. In Kenya, “mobile money” allows users to transfer funds by text message and has helped 194,000 households escape extreme poverty as they saved more and made different choices. In Mexico, people now open bank accounts with only a phone number. That has led to nine million new bank accounts in two years.

No More ATMs?

Is cash dying? Visa CEO Al Kelly says that certainly is his goal—and you won’t hear any arguments from Millennials, who often view cash as a nuisance. Within 20 years there will be no more ATMs, one expert predicts.

Half of Sweden’s banks already do not keep any cash on hand. Amazon’s brick-and-mortar retail stores only accept credit cards and mobile payment methods. The Department of Motor Vehicles in Louisiana ditched cash last year. Boston’s transit agency has similar plans. India is considering the move nationwide.

Is cash dying?

There is a downside to progress. Millions of people in the U.S. and billions globally do not have access to credit cards or e-payment systems. In the U.S., some 20 million adults are unbanked, according to the Federal Deposit Insurance Corp. The number is even higher–40 million–according to an estimate from Operation HOPE, which puts the number globally at 2.5 billion.

These people would be further distanced from the financial mainstream. Yet the same mobile technology that lets a teen go to the mall and spend freely with nothing more than an iPhone can also make it easier for an economically disadvantaged adult to open a bank account and avoid expensive payday lenders.

To make this new world a reality as quickly as possible, a Visa pilot program is offering 50 U.S. Businesses up to $10,000 to stop accepting cash. Mobile technology is a powerful ally in the fight for financial literacy around the world. But we must show the less fortunate how they too can gain access and benefit from a cashless society.

More on Technology and Financial Literacy:

How Venmo is Changing the Rules of Financial Education

Lifting the Vast Population of Unbanked

With ‘Chatbots’ Will We Need Financial Education?

Posted in Latest Research on November, 2017