Personal finance management has become a top priority for many individuals in the face of global economic crisis and inflation. On top of that, such generations as Millenials and Zoomers are struggling with handling the monetary demands of a highly challenging environment. It’s not a surprise, then, that consumers are in a constant search for solutions that would help them track and manage their budgets. That’s when AI budgeting apps make their entrance.
Recent statistics demonstrate the increase in popularity in the budgeting apps market. In particular, Business Research Insights highlights that globally, this niche will reach USD 359.01 million by 2032, with a 5.4% CAGR.
One of the factors that further contribute to this growth is the utilization of Artificial Intelligence (AI) in the field. AI in financial software development serves as the key to boosted performance and improved prediction functions. For example, 66% of CEOs in banking and financial markets emphasized that the benefits of adopting AI were worth the risks.
For startup owners, this surge in demand represents a significant business opportunity. Understanding critical tendencies in this field will allow you to remain competitive and learn how to create a budgeting app.
Stay with us to learn how to build a budgeting app and make it thrive in the long term.
What is an AI-driven budgeting app?
What is a budgeting app exactly and how does it work? In the most basic sense, it’s a tool that helps users manage their finances with tips, tracking, and budget analysis.
However, an AI budgeting app is software that offers a much broader scope of capabilities, from personalized advice on saving money to giving customized insights about different types of expenditures. Such a program is focused on anticipating customers’ needs based on the available data and providing real-time suggestions relying on users’ behavior.
The need for AI-powered budgeting apps
Below, you’ll find the features defining the best AI budget app and why they matter to users seeking reliable help with their money management.
Financial management automation
Analyzing and updating one’s finances manually is challenging even for the most dedicated, and it’s easy to lose track of one’s spending. This tendency has some hard numbers: according to Forbes, the average credit card debt per person in 2023 was $6,360, which is 10% more than in 2022. This demonstrates that some people do struggle with handling their monetary situation.
Keeping updated with day-to-day expenses and logging in every detail is not just overwhelming but stressful. With the introduction of AI in personal finance, the solution emerges on its own.
AI-driven apps take over the repetitive, mundane tasks by automating expense categorization and offering daily updates on budget and expenditures. It saves users time and ensures accuracy.
Enhanced user experience
User experience plays a crucial role: for example, 74% of individuals are likely to return to a mobile-friendly website in contrast to 79% of individuals who would rather search for another place if design and UX don’t satisfy them.
Today, customers expect more than simple functionality from their AI financial assistant — they want style and ease of use. The newest budgeting apps that utilize AI provide much better functionality and have user-tailored features that allow them to track their financial habits and behaviors.
Predictive capabilities
Due to AI’s ability to analyze past expenses and earnings, it can be a practical tool to predict financial trends for a user. AI in finance is already on the rise due to this function, and it’s no wonder that customers using such technologies would benefit from predicting cash flows, assessing bills, and forecasting the amount of individuals’ savings at the end of the month.
These features help individuals manage their expenses and identify financial issues on time.
Data-driven insights
AI’s ability to access and analyze large datasets makes it a game-changer in creating a budget app. Users’ financial history can be utilized as a source of data for AI to identify spending patterns, perform real-time analytics, or highlight key areas for financial growth.
With the hard data available, such programs alert customers about potential overspending or give tips based on their saving goals.
Examples of AI-powered budgeting apps
Cleo
A popular budgeting app on the market, Cleo is available on iOS and Android, providing AI-driven finance tips and spending overviews. Cleo has gained popularity due to the conversational language it applies in its AI chatbot and the combination of data and humor to connect with users.
It connects to their bank accounts and analyzes their spending habits, offering personalized tips and financial advice. Cleo provides suggestions on improving credit scores and budgeting for all types of customers, including low-income.
Wallet
Another impressive AI-powered app, Wallet from BudgetBakers assists clients with budgeting, expense control, and planning. It also syncs with bank accounts and credit cards, offering spending categorization with AI technology. It emphasizes its ability to learn from users’ behavior and provide data and inputs that they need.
While it’s more traditional than Cleo, it uses the latest innovations to achieve a customer-centered framework of analysis and offers relevant information specifically targeting unique objectives for every client.
Key features of an AI-driven budgeting app
AI-powered expense categorization and tracking
When it comes to using AI for personal budgeting, its ability to sort expenses into specific categories is the main function. Such a program typically goes through transaction data to present a comprehensive overview.
Budget customization
AI budget planning in a finance management program adjusts the budget goals based on users’ income and spending patterns. This adaptability makes it perfectly suitable for people with different incomes.
AI chatbot and voice recognition
Due to the skyrocketing popularity of interactive-based programs, more companies have decided to create a budgeting app with AI-powered chatbots or voice assistants. They provide answers in real time and maintain a more “human” touch.
According to IBM, chatbots can handle up to 80% of routine tasks and customer inquiries, so introducing them is reasonable.
Spending analytics
Business owners contemplating how to create a budget app should always make sure they offer detailed analysis of data to come up with actionable insights.
Goal setting and tracking
The best budgeting app should propose customizable objectives that users can choose or edit to set realistic financial goals and track progress toward them.
Personalized financial recommendations
Ideally, an AI-driven solution should offer unique advice on achieving better financial health based on prior expenses and income.
Real-time insights and notifications
Quick and regular updates enable users to keep their expenses in check daily, especially if they are prone to overspending. An app can send alerts about potential budget overruns or saving opportunities.
Automated savings tools
The budget app can automatically round up transactions or transfer small amounts to savings accounts, helping users accumulate money with minimal effort.
Security and fraud detection
According to the Federal Trade Commission, almost half of all reports it recorded were due to fraud; as per the report, people lost over $10 billion to fraud. That’s why security is so critical when creating an app for budgeting — it should monitor suspicious activity and signal users about potential fraud.
Looking to develop an AI-driven budgeting app?
At Eastern Peak, we can help you create a cutting-edge solution that automates financial management and provides personalized advice.
How to develop an AI-driven budgeting app
1. Define the concept and do market research
Before launching into making a budget app, start by defining the purpose and goals of your app. Conduct a market assessment to explore your options, rivals, and less overcrowded niches. Because this field is highly competitive, opt for gaps that your AI personal finance app can fill in.
That’s why, prior to trying anything or creating the first product idea, make sure to study the market and check each example to ensure you’ve got a novel proposition for your future customers.
2. Planning
It’s crucial to collaborate with your chosen development partner with knowledge of making AI-powered mobile apps. Create certain goals, outline the app’s architecture, and decide on the main functions you’d like to include.
3. UI/UX design
Regardless of your app’s quality, user experience will significantly depend on design and ease of use. Since the FinTech industry and budgeting are already challenging, focus on making your software intuitive and straightforward with easy navigation.
4. Development and QA
This step is one of the most crucial because it determines how well your AI budget app will actually work. This stage covers coding both the frontend (the user-facing part of the app) and the backend (servers, databases, and APIs). Additionally, your development team will need to dedicate time to creating a strong AI model with well-thought-out machine learning algorithms.
It’s wise to never save resources on testing — without it, you can easily overlook some of the most important features that will be difficult to fix later. Focus on the accuracy of your AI model to guarantee that your expense analysis, past trend assessment, and future predictions are accurate.
Assign your development team to check if your AI-powered budgeting app runs smoothly across various platforms and devices. Because AI-powered apps deal with sensitive financial information, don’t forget to include industry-specific security protocols based on where your app functions.
5. Launch, gather feedback, and improve
Your software’s journey only begins after you launch it. It’s a common misconception to assume that once a product is finished, it has achieved its end result. Nonetheless, your team will almost undeniably face certain roadblocks and will need to adjust or change some of the app’s features based on customers’ feedback. Gather it with the help of AI, analyze, and improve.
Considerations when developing a budgeting app
Monetization strategy
Let’s look through the best AI budgeting app monetization approaches for you to consider:
- Free tier. This one would cover the basic functions and, if the users intend to add more to it, they can pay additionally.
- Pay-as-you-go option. In this case, such a model provides an option to pay for specific functions as the need arises.
- Premium alternative. As mentioned above, the free tier can be a starting point for your customers to explore. With premium, you can add other features that your users can purchase to enhance their experience.
- Family plan. Typically, this plan is more costly than a one-person premium but still cheaper than several individual payments, making it more affordable.
- Company tier. If you plan to target businesses instead of separate individuals, you can add this to your monetization.
Security and compliance
Intertrust’s report mentions that almost 80% of financial apps have security problems that could cause data breaches. Attacks on mobile devices are becoming increasingly frequent. Zimperium reports a staggering 138% rise in critical vulnerabilities for Android, while iOS has seen an 80% increase.
Your app should comply with the legal standards in your country due to how sensitive your clients’ data is. Make sure to implement proactive measures to protect your information before, not just after the possible crisis.
Integration with banking APIs
Choose reliable banking APIs to ensure fast and quick operation processing. Opt for reliable APIs like Plaid, Yodlee, or Stripe for a better connection to users’ accounts.
Model accuracy and reliability
The more accurate your AI model, the more reliable your AI finance app is. Make sure you train your model on reliable data and regularly update it to make its performance trustworthy and relevant.
Ethics in AI
The ethical concerns in exploiting AI remain controversial on several levels. AI algorithms should rely on ethical guidelines to avoid bias or false advice. That’s why you should train your model on diverse data as well.
Final thoughts
Innovators in search of a fast-paced and promising industry will benefit from creating an AI budgeting app. Despite competition and field pressure, it’s a niche with multiple opportunities and audiences to target. However, they need to understand the market to build a budget app that will stand out from the crowd.
Do you want to create a budget app? Reach out to our team — we’ve got experience in creating customized applications based on our customers’ objectives, and we know how to anticipate your clients’ expectations and surpass them.
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