Meet The Chatbots That Might Manage Your Money One Day

When it comes to banking and finance, chatbots are everywhere. In the future, they’ll be doing more than answering your questions and providing phone numbers, according to people who work in artificial intelligence.

Chatbots will be more proactive, says Zor Gorelov, chief executive of Kasisto, a company creating conversational AI for banking and finance clients. They’ll be able to anticipate individuals’ needs and offer advice before users even ask a question, though there is still a long way to go before many of these features become a reality.

Instead of pointing you to a resource such as a phone line or FAQ page, chatbots could one day be resources themselves, able to offer highly personalised responses to individual questions and scenarios.

Daria Zabój, product marketer at ChatBot, an AI software developer, says chatbots will be able to analyze investment questions, such as whether to invest in gold or bitcoin, in real time. At Chatbot, products like Cleo and the Covid-19 Risk Assessment Chatbot already take questions and process them to offer limited advice, but Ms. Zabój says that tools like this need more years of practice and thousands more conversations to improve their personalized instruction.

Fidelity Investments imagines a world of virtual assistants that will greatly reduce the need for clients to call and speak to a person. Decades from now—or years, depending on how quickly the tech advances—a bot like this could evaluate itself on task completion by better perceiving what an individual wants from an interaction.

Chatbots may become more lifelike by incorporating audio and humanlike forms. As augmented reality grows in popularity, users may want to invite the chatbots into their physical environments. This way, individuals could try out consumer products or ask for advice from a chatbot that answers their questions via voice assistant or computer-designed avatars.

As these chatbot experiments go mainstream, however, Ms. Zabój predicts some users will want companies to ask for their input on what feels too lifelike.

More people have to use chatbots to build better databases of chats and improve the bots, says Szymon Klimczak, chief marketing officer of LiveChat, ChatBot’s parent company. “As of now, all these scenarios are still very basic because the industry is still very young,” he says.

Tuesday’s retail sales report could be the scrap of evidence that tips the balance as Federal Reserve officials decide how much to cut interest rates on Wednesday.

It is practically a given that the central bank will reduce rates. Inflation has fallen to its lowest point since February 2021, giving the Fed more flexibility to focus on the second component of its dual mandate—achieving maximum employment. Although the labor market remains resilient, the most recent two jobs reports have been weaker than expected, putting some pressure on the Fed to loosen monetary policy.

The question now is by how much rates will fall—0.5 percentage point, or 0.25 point? The indications from interest-rate futures are split , recently favoring the more aggressive half-percentage-point decrease.

Andrew Hollenhorst, an economist at Citi , leans toward the likelihood the Fed is more cautious on Wednesday, cutting rates by 0.25 percentage points. But he notes that it it is a close call that depends on the dynamics of the bank’s rate-setting committee and the strength or weakness of Tuesday’s retail sales report.

A positive surprise would suggest that both consumers and the labor market remain resilient, paving the way for a more modest cut. If the report comes in well below expectations, however, Fed officials may grow concerned that a weaker labor market is weighing on consumer spending, which could lead to a bigger cut, Hollenhorst added.

Louis Navellier, founder and chief investment officer of the money-management firm Navellier agrees. “In theory, if the August retail sales report is horrible, then a 0.5% Fed key interest rate cut may be forthcoming on Wednesday,” he said.

Economists are expecting retail sales will decline by 0.2% in August from July, according to FactSet. They jumped by a surprising 1% in July .

Lower gasoline prices and car sales will likely drag the headline number lower. Indeed, stripping out car and gas sales, retail sales are projected to increase by about 0.3% month over month.

Yet there is growing concern that even excluding autos and gas sales, the sales figure will be soft. While spending was remarkably strong in July, the Fed’s latest Beige Book flagged that consumer spending ticked down in August, points out Bill Adams, chief economist for Comerica Bank . Many retailers, particularly those catering to lower-income shoppers, have warned that Americans are being cautious and exceedingly choosy about what they are buying and where.

The impact of the retail sales report will likely extend beyond the immediate rate cut. The insights it contains about U.S. consumers will also factor into the Fed’s quarterly update to its Summary of Economic Projections, containing officials’ latest forecasts for the U.S. economy, inflation, and near-term interest rates.

The so-called dot plot , which charts the individual interest-rate projections of the seven members of the Fed’s board of governors and the 12 regional Fed presidents, is always closely watched as investors try to chart the Fed’s future actions.

Hollenhorst believes the median dot showing where rates will be at the end of 2024 should show “at least” 0.75 percentage-point of cuts, factoring in 0.25 point at each meeting through the end of the year. But it is likely that officials will leave the door open for more cuts in case data on the job market or consumer spending sour faster than expected.

Meet The Chatbots That Might Manage Your Money One Day

More proactive and personalized bots could aid your investment decisions in real-time.