AI in finance must explain itself

AI is moving into personal finance apps, promising to spot patterns in spending and suggest better habits. We welcome the idea. But we think one condition matters more than any feature: the AI must be able to explain itself in plain language.

Why explainability matters in finance

Money decisions carry consequences. An unexplained suggestion can feel manipulative, and a wrong one can cause harm. When users understand why the app says something, they can judge whether it makes sense for them.

An upcoming example

Bankys, a personal finance platform being prepared by Saberoid Innovations Private Limited in Gurgaon, plans AI-driven insights into spending patterns. These sit alongside a neo-banking account with a RuPay UPI card, a Twin Sweep card the company says lets users spend via UPI and invest automatically, goal-based saving across fixed deposits, gold and mutual funds, and rewards. The platform is a waitlist, and how its insights will be presented has not been shown publicly.

What good explanations look like

• The data behind the insight: which transactions or period
• The comparison: against what baseline or goal
• The suggested action, clearly optional
• A way to say “this is wrong” or switch it off

Consent as part of explainability

India’s Account Aggregator framework allows consented sharing of financial data, and Bankys mentions building on it. Users should understand what data they have shared, for what purpose and how to withdraw consent.

The counterpoint

Too much explanation can overwhelm users. The answer is layered design: a short reason upfront, detail available on request.

There is a business benefit as well. Users who understand why an app makes a suggestion are more likely to act on it and to keep using the app. Explainability is not only an ethical safeguard; it is part of what makes AI features useful.

Our view and a necessary note

Explainable AI should be the default for any app that touches money. Bankys says it is an AMFI-registered mutual fund distributor (ARN-360253). Mutual fund investments are subject to market risks and returns are not guaranteed; this is not investment advice.