Improving Financial Well-Being through Personalized Financial Product Recommendations
Financial decisions are some of the most important and complicated decisions in a person’s life, and play a major role in one’s well-being and happiness. Choosing among modes of investment or loan products can be very stressful for a layperson. A financial decision maker (FDM henceforth) can either fall back on generic, impersonal advice (e.g. diversify your portfolio, invest in stocks due to the stock premium effect, etc.) or seek the help of wealth management professionals who can have their own biases with respect to financial decisions. We are not allowed to learn from the success and failures of past financial decisions of people in a similar demographic stratum and financial situation as us. Our proposed work seeks to remedy this by building a recommendation system for financial products such as loans, investment vehicles, virtual wallet accounts, etc. Our aim is to not only make a recommendation but also explain why the particular recommendation was made.For example, if small business owner accounts have improved cashflows within a few months of taking out a facilities improvement loan, it indicates that a small business owner can be recommended such a loan. The same product or service can be useful to different customers due to different features of the product/service. For example, a savings account with a minimum balance but free checks and demand drafts might be of use to a person who currently pays for getting checks and demand drafts. A minimum on an account type’s average monthly balance might be useful to another person for having a cash safety net for difficult times, since it encourages the customer to maintain the monthly balance to enjoy certain account privileges.Making data-driven financial product recommendations that can be explained to FDMs ensures that FDMs will be better informed and more driven to adopt the recommendation. Such a recommendation can also mitigate risk for the bank in case of loans since the FDMs adopting the recommendation are more likely to have better financial outcomes as predicted by historical data. This is especially true for financially vulnerable population who can benefit even more with appropriate recommendation.
