I Tried Using a Chatbot for My Finances — Here’s What Happened

financial chatbot

Do you know how much money you have in your bank account?

Chances are, you just picked up your phone to check a mobile banking app. But if you’re like 85.5 percent of millennials, according to Jumio’s 2016 Global Survey of Millennials, you might not be fully satisfied with the mobile banking experience offered by your bank.

Enter the personal finance chatbot.

What is a chatbot?

A financial chatbot is one way for banks and other financial services to connect with customers on a more personal level. It’s meant to simulate a conversation with another human. The user can type a question into a message box, and the chatbot comes up with the answer instantly.

In the world of personal finance, chatbots are being used by banks to answer questions about bank balances, recent transactions, and spending trends simply by using a text-like feature on a smartphone.

Banks aren’t the only ones interested in developing chatbot technology, either. Chatbot apps like such as Olivia and Penny are popping up, promising to help you track your finances and give you suggestions based on the insights gleaned from your financial data.

For the most part, today’s chatbots rely to some degree on preprogrammed responses and advanced algorithms designed to pinpoint key phrases and search out the information you’re looking for.

Chatbot supporters like to point to them as a big step in artificial intelligence (AI). However, many of the chatbots in use today aren’t necessarily true AI.

“Chatbots are interesting, but none are truly driven by AI right now,” said Alex Cohen, founder of Birch, a fintech company that helps shoppers find the right rewards programs for their purchase habits. “The human still has to teach it new recognitions.”

Most chatbots don’t truly learn on their own, he explained. Instead, a person must go back to failed conversations, see what went wrong, and then update the application. That way, the chatbot can conduct a similar conversation in the future — this time without failing.

Can a chatbot help you manage your money?

Eager to test out this technology, I decided to give personal finance chatbot Penny a try.

Penny is billed as your “personal finance coach.” Once you download Penny for iOS or Android, you can immediately start connecting your bank accounts.

Once you connect your accounts, Penny can look for trends in your spending and share insights about your budget.

what is a chatbot

Image via Penny

While there are pre-set questions you can ask, Penny can answer typed questions to help you identify spending trends. The bot also offers tips about where you can find savings in your budget. She suggested that I download the app GasBuddy to help me find the lowest prices on gas in my area.

Penny even helps you plan for the future. You can look at your spending by category and get a forecast for your likely spending in the coming month, based on past trends.


Image via Penny

Chatbots aren’t perfect

While using the Penny app, I did discover that there are some glitches that need to be worked out. Purchases are sometimes miscategorized, and you might need to manually remove some transactions (like transfers between accounts). That way, your spending reports remain accurate.

You can click on the bank icon in the upper right corner to look at your accounts. However, Penny might not always have your current balances. If your purchases weren’t processed quickly, the app could show you outdated numbers. If you make budget choices based on bad information, you might be in for an unpleasant surprise.

Even asking how much money you have right now doesn’t always yield the most accurate answer. You might still have to double check your bank account in real time.

In the end, if I’m looking for a top-level view of my finances, other money tracking apps can give a more comprehensive picture. But all your spending is in one place, navigation is easy, and I don’t have to ask questions to find the information I’m looking for.

Recognize technology’s limitations

Chatbots can give you basic info on a slick interface. But should you trust their advice when it comes to your money?

A chatbot from a bank could steer you toward that bank’s products and services. More general bots like Penny might eventually begin receiving payments for directing you to different products and services. It can be an interesting way to get more information, but you might get totally biased advice.

While I found Penny to be an interesting novelty, I’m not sure it’s ready to fully help me manage my money. Personal finance chatbots seem like a good source of information, but they don’t yet offer personalized advice that’s truly actionable.

A human advisor can sit down and map out your course; a financial chatbot mostly fetches your information and offers simple tips. It can be helpful in terms of analyzing your spending and getting some insights into your habits. However, a human financial advisor might be more useful if you want a holistic financial plan that helps you reach your goals.

But Cohen doesn’t think we’re there yet, either. “I don’t think anyone will use a chatbot solely for their finances,” he said. “I feel chatbots are a good engagement medium, but not standalone products.”

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