Pefin, a fintech start-up, is using A.I. to offer financial advice. Just don't call it a 'robo advisor.'

Ramya Joseph, Pefin founder
Source: Pefin

For many people, making personal finance decisions is necessary and a major source of stress.

Helping alleviate that confusion is what compelled Ramya Joseph to leave her position as vice president of proprietary trading at Goldman Sachs, and found the financial technology company Pefin in 2011. As competition and technology reshape the sector, "we're being the change we'd like to see in the financial services industry," Joseph said in a recent press release.

Automated financial advice is becoming more commonplace in the hunt for bigger returns, yet Pefin bills itself as "the world's first [artificial intelligence] financial advisor." The company aims to use machine learning to deliver a range of financial planning and investment advice via a chat interface.

"I started Pefin mainly because when you think about less affluent people, there's really no access to financial advice aside from robos," Joseph told CNBC in an interview recently.

"When people say, 'I want to retire comfortably,' there's really no avenue for them: Either do it yourself or use a financial advisor — but if you go to a financial advisor, they are expensive and they usually have minimums which price a lot of people out of their services," she added.

Joseph, who holds graduate degrees in computer science and financial engineering from Columbia University, was spurred by her father losing his job during the 2008 financial crisis. The global upheaval jeopardized his financial future and retirement plans.

"I was working at Goldman and helping millionaires, and here was my dad, just trying to retire. I thought, 'What do people do when they don't have someone like me to help my dad and make spreadsheets?'" Joseph said.

"So the core of the company is very user centric. It's a very different underlying model," she added.

Fabrice Coffrini | AFP | Getty Images

Pefin, which got its name from the contraction of "personal finance intelligence," is set to launch this fall. While robo advisors are a major trend in the wealth management space, Joseph sees Pefin's AI solution as very different.

"Robos are trying to execute a transaction, while we are trying to manage your finances. Investing is optional with us, and we'll help you if we think it's the right move for you" rather than generating fees for the company, she told CNBC.

At the core of Pefin's AI is a feed-forward neural network. According to Joseph, the network looks at different answers from consumers and offers various solutions as a response.

"If you look at things like [IBM's] Watson, they don't tailor the solution to you. It's just generic advice," Joseph said.

In contrast, she said, Pefin receives three months of your spending data, which helps the AI tailor its plan to your particular spending habits. Pefin also plans to send its customers content to educate them about finance.

"The longer you stay in the system, the more we learn and the better we get at predicting and advising you because we can tie it back to your habits and what works for you," Joseph said.

Curently, the start-up is mostly self-funded by Joseph, in addition to a few private investors, as well as friends and family.

"We might raise [venture capital] later this year, and then decide if we want VC money or not," she said. "It's a matter of circumstances."

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