The impact of AI in financial services

Discover how AI is quietly reshaping everything from budgeting to fraud protection, and investment decisions – not by replacing humans, but by becoming a powerful partner in the future of financial services.

By Caragh Medlicott

New

Created on: 15/12/2025

Reading time: 5 mins

Key takeaways

AI is transforming personal finance by automating tasks like budgeting, expense tracking, and fraud detection, making money management more efficient and accessible.
While AI tools like ChatGPT can assist with investment research and financial insights, they should complement, not replace, human expertise and professional advice.
The future of AI in finance promises hyper-personalisation, smarter tools, and greater accessibility, but maintaining data privacy and human oversight remains essential.

For some, Artificial Intelligence is the harbinger of a new technological age; for others, it’s a fad sure to die out. But, however you feel about it, there’s no escaping the conversation around it.

These days, “AI” is so familiar it hardly needs its full name. But that wasn’t always the case. Cast your mind back, for a moment, to the first time you heard about Artificial Intelligence...

If you’re anything like me, that probably wasn’t “IRL” but in some form of sci-fi film or TV show (I’m looking at you, I Robot). It’s no surprise, then, that many of us have some misconceptions and anxieties surrounding the rise of AI.

And, in fairness, the changes have been coming thick and fast.

A 2025 review from PwC found that 54% of workers across all industries have used AI at some point in the last 12 months.¹ Given how rapidly AI is entering the workplace, concerns around job safety are to be expected. But according to research from Indeed, AI is more likely to transform job roles than eradicate them entirely.²

In fact, in many ways, AI isn’t as new and scary as it seems.

While it has advanced considerably in the last few years, AI has existed in one form or other within the finance industry for longer than you might expect.

Used to aid fraud detection and credit scoring (among other things), AI has been an interwoven and integrated part of many financial processes for a while (with some early applications dating back to the 1980s³).

Before we dig into all the other ways AI might be used within financial services, we need to look a little more closely at what AI actually is.

At its core, AI refers to the development of machines that can mimic human intelligence – learning, reasoning, and problem-solving. By doing these things with maximum processing power and efficiency, it leaves humans free to focus on the more intricate, creative problems that make up the more meaningful portion of our work (and life).

Let’s take a quick look at a breakdown of the few most common types of AI:

Algorithms

Algorithms are step-by-step instructions or "recipes" that guide AI systems in processing data and solving problems. They’re the core logic behind everything AI does.

Machine Learning (ML)

ML is a branch of AI where computers learn patterns from data to make predictions or decisions. It powers things like product recommendations, fraud detection, and self-driving cars.

Large Language Models (LLMs)

LLMs are advanced AI systems, like ChatGPT, that process and generate human-like text. They can write, answer questions, and even hold conversations by analysing massive amounts of language data.

Chatbots

Chatbots are software tools designed to simulate conversations, helping with tasks like answering questions or providing customer support. Advanced ones use LLMs for more human-like, context-aware interactions. Examples range from sophisticated virtual assistants like Siri and Alexa to simpler rule-based chatbots often used on websites for customer support.

In the rest of this article, we’ll explore how AI is reshaping the financial world – looking at its role in personal finance, the tools you’re already using, and its potential for the future.

Jump to a specific section:

AI's growing role in personal finance
AI applications in finance you’re already using
AI for budgeting and money management
AI for investment decisions
How AI is transforming financial services
Data privacy and security
The future of AI in financial services: what could be coming next?
The bottom line: AI as a tool, not a replacement

AI's growing role in personal finance

AI is no longer just a buzzword; it’s a tool that’s being used with increasing frequency in every field and walk of life, including personal finance.

In 2025, machine learning is embedded into everything from banking apps to budgeting tools — and is even used by some investment platforms.

In fact, the Bank of England found that 75% of financial firms are already using AI, with a further 10% planning to use AI over the next three years.⁴

And it’s not just companies putting AI to use. Take personal budgeting, for example. AI-powered apps can categorise your spending, track expenses, and even suggest ways to for you save.

Investment platforms, on the other hand, may use AI to assist users in making smarter decisions. Some individuals actually mimic this process by using tools such as ChatGPT to research investments and create personalised budgets.

While this shows how versatile these tools can be, it’s worth noting that AI isn’t perfect. It can (and does!) make mistakes – that's why it cannot provide regulated financial advice, and professional guidance is still important for those who need it.

Please note: these examples of AI for guidance are not applicable to crypto or complex trading. Ultimately, AI is all about making everyday finances easier.

AI applications in finance you’re already using

That’s right. Even if you think you’re not interacting with AI – there’s a good chance you are (even if it’s indirectly).

Here’s some common ways AI is helping people manage their money:

Fraud protection. AI systems can detect suspicious activity within milliseconds, protecting bank accounts (and the like) from fraud.

For example, in 2024, Mastercard reported that using AI-based predictive technology had helped them increase the speed of identifying merchants who were at-risk from – or compromised by – fraudsters by a whopping 300%.⁵
Smart categorisation. Most banking apps now automatically sort your spending into categories like groceries, bills, and entertainment, saving you time and effort.
Automated savings. Round-up apps and tools that predict your spending habits can help you save money without even thinking about it by rounding up the cost of purchases and saving the extra leftover.
Chatbots. Many banks now offer AI-powered chat assistants to provide 24/7 customer support.

These tools are improving convenience and efficiency, but always remember that there’s still a human element to the way these AI systems are managed.

For example, here at Wealthify we pride ourselves on our friendly customer care team who handle all queries, even those initially directed to our chatbot, to ensure you get the best support.

AI for budgeting and money management

Budgeting is one of those things we all know we should be doing, but sometimes struggle to stay on top of. Whether it’s the month getting away from you or just the general busyness of life, it’s not always easy to keep tabs on all your expenditures.

Here are some of the most impactful ways AI is helping people budget and manage their money better:

Real-time expense tracking

AI can automatically categorise your spending and flag unusual transactions. For instance, your app might alert you if you’ve spent more on takeaway than usual (hey, we all do it sometimes!) or if you’ve been more frugal than in prior months.

This allows you to be more mindful of your day-to-day spending, and also to see – in the long term – in what seasons you tend to spend the most money.

Predictive budgeting

Fitting in alongside real-time expense tracking, predictive budgeting works by analysing your income and spending patterns, allowing AI to then help forecast your future expenses and even automate your savings to fit your goals.

This takes the headache out of future budgeting, so you can focus more on changing your behaviour and spending habits than planning what to do next.

Bill management

AI tools could help you negotiate better deals on your bills or cancel subscriptions you’ve forgotten about, saving you time and money. It can also help by automating tasks such as tracking due dates, categorising expenses, and sending reminders to avoid late payments.

Personalised Insights

The more you use these tools, the better they get at understanding your habits, offering tailored advice to help you make smarter financial decisions.

Of course, data privacy is key when it comes to using AI tools. In the UK, financial companies must comply with strict FCA regulations, ensuring your data is handled securely.

AI for investment decisions

Making decisions around investments can be hard. And with money at stake, many prefer to leave it to the professionals.

Still, the potential for generating returns remains a strong draw (even for those without experience), with research showing that almost half of British investors (42%) first started because they wanted to beat the interest paid by cash savings accounts.⁶

While AI is being used by both people and companies to help with investments, it’s incredibly important that caution is always exercised when using AI in this way.

Let’s look at some examples of how AI can support investment decisions:

ChatGPT for research

Many people now use AI tools like ChatGPT to analyse market news, clarify financial terminology, or explain investment concepts. Research suggests these tools can achieve roughly 70% accuracy on financial questions⁷, performing better with simple queries than more complex scenarios.

However, like all AI systems, they can sometimes be inaccurate or oversimplify important details – so keep your questions straightforward and always double-check important information.

Automated portfolio management

Some platforms use AI to rebalance your investments based on your goals and risk tolerance. However, at Wealthify, we rely on human experts to manage investments, ensuring a personal touch.

A real example

In March 2023, Finder.com launched a ChatGPT-managed investment fund with 38 stocks⁸. Over two years, the fund surged by 41.97%, outperforming the UK’s top 10 funds, which gained just 27.63%. At its peak, it beat the competition by almost 23 percentage points.

The highs:

Top performers included NVIDIA (up 377.44%), Meta (up 253.6%), and Netflix (up 208.93%). ChatGPT clearly picked some winners, sparking growing interest in AI for investing.

But here’s why you should still be cautious:

AI can’t predict markets: ChatGPT has the potential to excel in bull markets, but its success isn’t guaranteed in a downturn.
No personalisation: It doesn’t tailor picks to your goals, risk tolerance, or financial situation.
Risk management matters: Investing isn’t just about choosing stocks – it’s about diversification and long-term strategy.
AI can make mistakes: ChatGPT may oversimplify complex financial advice or present inaccurate info.

The bottom line? While ChatGPT’s fund performed well, investing is about more than picking trending stocks. AI can be a helpful tool, but for serious investing, you still need human expertise.

Remember, too, that AI tools do not provide regulated financial advice, and major investment decisions should always be guided by qualified professionals. Even ChatGPT emphasises that it should support – not replace – professional financial advisors.

At Wealthify, we strongly caution against using LLMs such as Chat GPT to develop or execute your investment strategies.

And remember, with investing, the value of your investments can go down as well as up, and you could get back less than invested.

How AI is transforming financial services

So, in a nutshell, how is AI transforming financial services? Here are some of the key changes:

Faster decisions. Loan approvals that once took days can now happen in minutes, thanks to AI’s ability to analyse creditworthiness quickly.
24/7 availability. AI-powered systems mean you’re no longer restricted by business hours, even when it comes to some customer queries.
Payment automation. 63% of CFOs say AI has made their payment automation significantly easier.⁹
AI and the markets. While AI is creating opportunities, it’s worth keeping an eye on potential risks, such as the formation of AI-driven market bubbles.

Data privacy and security

At Wealthify, we take data privacy and security very seriously, especially when using AI tools. Here’s what you should know:

FCA regulations: UK financial companies are required to meet strict data protection standards.
What to check: Always look for FCA authorisation, read privacy policies, and understand what data is being collected and how it’s used.

Your data is valuable, and it’s important to trust the companies you share it with.

The future of AI in financial services: what could be coming next?

With all this AI-driven moving and shaking, what’s to come in the future? Well, here are a few thoughts on what we might see down the line thanks to AIs continuing development:

Sophisticated personal assistants. These could be much more advanced than what we have today, with AI not only responding to your requests but anticipating them – learning your habits and financial rhythms so well that they can flag opportunities or risks before you’ve even noticed they’re on the horizon.
Better retirement planning. With AI tools that evolve alongside you, adjusting as your career progresses, your family situation changes, or your priorities shift, AI could help you build a future that reflects who you are now, rather than who you used to be.
Hyper personalisation. This goes far beyond generic advice, AI could be able to offer guidance shaped around your specific life stage, from buying your first home to funding a child’s education or even preparing to wind down from your working career.
Greater accessibility. As AI powered fintech lowers barriers across emerging markets, high quality financial services may become more available to people who have traditionally struggled to access dynamic, up-to-date financial information and tools.
Human and AI collaboration. This could allow advisers to work more efficiently and creatively, using intelligent systems to sift through data and spot patterns so they can focus on deeper conversations, complex decisions, and the personal touch that technology can’t replace.

The bottom line: AI as a tool, not a replacement

Well, one thing is for sure: the AI that is active today isn’t anything like the villains of science fiction movies. What it is, of course, is powerful.

It’s understandable that something so new and fast-developing may appear daunting, but hopefully this article has helped illuminate why AI is here to help rather than hinder.

Ultimately, no tool (not even a very smart one) can replace human expertise. In finance, for example, it’s best seen as a way to enhance services and improve efficiency while keeping people at the centre of decision-making.

So, whether you’re using AI for budgeting, managing investments, or simply interacting with your banking app, remember: AI is here to help, not take over.

To understand more about how we handle your investments at Wealthify, visit our Why Invest page.

Please remember the value of your investments can go down as well as up, and you could get back less than invested.

AI tools do not provide regulated financial advice.

Major investment decisions should always be guided by qualified professionals regulated by the FCA.