Insights

AI and the democratization of finance: Making wealth building accessible

Maureen Doyle-Spare, Head of Banking and Financial Services at UST, and Peter Charrington, UST Advisor, Former CEO of Citi Private Bank

Recent economic challenges—rising interest rates, persistent inflation, and increasing household debt—have created a complex landscape for individuals striving for financial security. Yet, amidst these difficulties, a powerful trend has emerged: the growing movement toward democratizing finance and making wealth-building accessible to everyone. This isn't just about weathering uncertainty; it's about leveraging key lessons to shape a more inclusive and prosperous future. As we look ahead, the focus on smart debt management, improved savings habits, and accessible retirement planning is paving the way for a more equitable financial landscape.

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What we learned in 2024: A year of adaptation and resilience

2024 served as a crucial year of economic adjustment. Interest rates climbed to levels unseen in over a decade, significantly impacting the cost of mortgages, loans, and other forms of borrowing. For instance, the average 30-year fixed mortgage rate soared above 7% at times, creating affordability challenges for many. Coupled with this, U.S. household debt reached a staggering $17.6 trillion, placing immense pressure on families nationwide. High interest rates made borrowing significantly more expensive, and credit card delinquencies rose to 3.3%, a stark reminder of how quickly debt can become overwhelming.

These economic headwinds tested the financial resilience of individuals and households, and a remarkable spirit of adaptation emerged. Savings rates increased to 4.8% by year's end, indicating a collective effort to prioritize financial health.

These challenges also spurred innovation. Many individuals turned to digital solutions like budgeting apps and AI-driven repayment planners to regain control of their finances. These tools simplify the often-complex process of debt management and make it less intimidating, empowering users to take charge of their financial situation.

The accessibility of these digital tools is a critical component of financial inclusion. When everyone has access to the right resources and advice, they can avoid the pitfalls of high-interest debt and build a more secure financial foundation. This democratization of financial tools is essential for creating a more equitable economic landscape.

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The role of AI in personal finance

Artificial intelligence (AI) has quickly become a transformative force in personal finance, powering solutions that empowering individuals to make smarter financial decisions and equipping wealth managers with deeper insights to optimize client outcomes. Generative AI tools like Google Gemini, Claude, and ChatGPT are revolutionizing personal finance by providing real-time, personalized financial guidance.

Financial institutions are rapidly adopting AI to enhance efficiency, drive innovation, and improve financial services at scale. Banks and wealth management firms are leveraging AI-powered analytics to assess risk, detect fraud, and automate compliance processes. AI-driven platforms enable hyper-personalized investment strategies, allowing advisors to tailor financial plans with unprecedented precision.

Meanwhile, AI chatbots and virtual assistants transform client engagement, offering instant financial insights and support. As businesses navigate economic uncertainty, AI is becoming a critical tool in delivering smarter, faster, and more data-driven financial solutions that benefit both individuals and institutions.

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Advancements in financial inclusion

Efforts to promote financial inclusion have also gained momentum. The World Bank emphasized that access to credit, secure savings, and efficient payment services enable small businesses to expand, create jobs, and drive economic development.

The U.S. Department of the Treasury also published its inaugural National Financial Inclusion Strategy, focusing on fostering financial access, resilience, and well-being for all citizens.

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Rethinking retirement planning

Retirement preparedness also emerged as a critical concern. The median 401(k) balance for Americans aged 35-44 was just $27,000, underscoring the need for improved savings strategies. Over 40% of Americans felt "very unprepared" for retirement, highlighting the importance of accessible planning tools.

Automated contributions, employer matching programs, and increased education around alternative savings vehicles like Health Savings Accounts (HSAs) can make a substantial difference. These resources provide individuals with the confidence and knowledge to take control of their long-term financial security, regardless of their starting point. The latest trend shows a growing interest in target-date funds, which automatically adjust their asset allocation as retirement approaches, further simplifying the process.

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Democratizing wealth: A foundation for a stronger society

Financial literacy, combined with AI-driven digital financial tools, will become even more essential in the years ahead. Innovative apps using AI algorithms to offer micro-investing, fractional shares, and automated budgeting are reshaping how people manage their money, empowering even those with limited capital to begin investing and saving effectively. With the help of machine learning, these apps provide tailored financial recommendations, adaptive budgeting strategies, and real-time insights that allow users to grow their wealth consistently over time.

Robo-advisors, which leverage AI to automate investment management at low costs, are democratizing access to sophisticated financial advice previously reserved for high-net-worth individuals. These AI-powered advisors analyze market trends, user risk profiles, and financial goals to deliver personalized portfolio management, making wealth-building more accessible and efficient for everyone. Financial education is becoming increasingly digital, engaging, and AI-enhanced, with "finfluencers" emerging on social media platforms as influential sources of accessible financial knowledge, particularly among younger generations. While these influencers can play a positive role by raising awareness and simplifying financial concepts, AI-driven tools can help consumers assess and validate this information, mitigating potential risks.

Ultimately, combining robust AI-powered tools, credible educational content, and diligent research will ensure individuals have the necessary resources to achieve financial security and growth in an increasingly digital world.

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Looking ahead: The path to a more inclusive financial future

The economic outlook for 2025 remains uncertain. While inflation may ease slightly, borrowing costs are expected to stay high, and households will likely focus on rebuilding savings and managing debt. In this unpredictable environment, AI-driven financial tools enable growth, enhance economic resilience, and ensure broader access to wealth-building opportunities. We can navigate uncertainty and create a more equitable and prosperous financial future by leveraging AI for smarter decision-making, personalized financial guidance, and inclusive innovation.

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Let's shape the future of inclusive finance

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