torsdag 11. august 2016

Another approach to Personal Finance

Re-Inventing Personal Finance using Data Science

Existing software and new approach

Usually existing Personal Finance applications are boring, because they are all dependent of manually input of your data, in right segment, the right amount, just boooring. In addition, you can count on manual input fails together with the impossibility of live update your financial status, to make it even worst experience. These and many other reasons make the existing Personal Finance applications nearly useless.

To avoid manual input of data into your application, you need a live feed from your transaction data (credit card usage, bank payments etc...) and only manual input for cash amounts. However, cash is very small problem, as we tend to avoid it as much as possible and instead we mostly buy with electrons.

Most of the banks offer to their customers a digital bank account where all the transactions are visible and that can the best source to avoid manual input. So, why we do not ask for built-inn application that will serve as Personal Financial app with even more possibilities to serve you.

The solution

This application can save lives, can make you better at your personal finance, can avoid financial crisis and help banks get better understanding of you as customer. It is not only you as a person that benefits, but the entire society and even the bank itself. Bank can have much better credit scoring for their customers and can avoid risky loans, risky bank interests for a particular customer etc…

To build (in) this app we need to consider many things and specially the approach that Business Intelligence solutions can serve to us, but keeping in mind security and impersonation as we work with very critical data.

Therefore, I am delighted to represent you PFI that stands for Personal Finance Intelligence, which represents a non-usual approach to Personal Finance solutions existing in market today.

Personal Finance Intelligence (PFI) aims to be a built-in Business Intelligence application inside your digital bank service to serve you as personal finance and budget planner assistant.

Inspired by a Norwegian TV Show “Luksusfellen”, this Business Intelligence app approach may be a solution for all these who fail to maintain well their own economy, and for those who want to perform their economy, save more and last but not least the bank itself.
The fundament of this concept is a Customer Analytics Data Center that would have the power process data on the transaction level. The duty of the data center will be to collect, structure, clean, model and present the data to the bank customers as usual Personal Finance application do, but in addition, data will be updated automatically. This is the reporting (presentation) layer of your financial status (picture), but this application can offer you much more and here is why!

In addition to a standard PF application, this solution include also bench-marking against an standardized customer (Ola Norman) that represent the data set of Min, Max or Average segmented by customer's choice and properties, for example: How I stand against customers from 28-35 years old, from east Oslo, in buying food and beverage this month?
To have more control and plan well your own economy, targeting will be an integrated service inside application where users (bank customers) can put their targets (manually) for costs or income or can leave the application algorithm fill that with projection based on each customer historical data. You can activate a flagging service, so you are warned when approaching certain limits in your expenses and run algorithm to optimize the use of remaining budget and you do not get broke.

Big Data can help make it even better

Last technological findings can make this approach even more interesting and meaningful. Imagine what Big Data and Data Science can do by adding external data for customers that will allow opening of their social media accounts to the bank application. Social media behavior is very important and can bring very important segmentation inside customer categorizations.

Machine learning algorithms can help make the decision and budgeting much better based on other decisions and budgeting techniques.


As I mentioned before, data impersonation and security are a showstopper as we are going to work with bench marking data sets that implies set of other customer’s data. Here we can have a potential data leak from one customer to another, so our system must ensure consistency in both sides and the bank system has everything under control. Transaction details of customers can make banks expose their ‘hidden’ costs and fees. Many banks will hesitate to offer this service to their customers just because of this; in other side customers have legitimate right to have such information.


Beneficiary to this approach are not only the customers and world economy, but also the bank itself in cases when they want to perform customer evaluation (credit check) and behave reaction to certain financial statuses. Today’s Credit scoring system lacks on better decisions because they miss important data.

I am on the way to build business concept and the technical architecture of this approach. My team and I would love to share this approach on details, including implementation, if any company, association or bank in the world is interested to offer this service to their customers. This can be the best preventive for World financial system to stay sustainable and not crush as it did before.

© Copyright All rights reserved to Besim Ismaili 03051982

Oslo, January 2015

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