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17 Apr 2017

Would you let a robot control your savings for a 5% return?

The artificial intelligence 'chatbots' now offering savings accounts

Artificial intelligence is no longer simply the stuff of sci-fi films - it's now being used to help people save for their future. So,for a return of 5%, would you let a robot control your finances?

Welcome to the world of savings 'chatbots' - new financial technology availablethrough your social media accounts and mobile phone apps, which isdesigned tomake savings decisions on your behalf.

To use these services, you shareyour past spending behaviour to enable a digital financial assistantto make recommendations on how much you can afford to save. If you're happy with their suggestion, you simply agree with your robotic financial adviserand deposit money into a savings account to get going.

And given that you're chatting to a savings bot through your phone or Facebook account, you'll be prompted to make savings with gifs and emojis - a slightly different type of conversation than you're used to when dealing with your finances.

Which? Money has tested out two savings chatbots - Chip and Plum - along with Cleo, aFacebook-based money monitor, to see whether saving-by-robot is really worth doing.

Chip - a savings bot that pays up to5%

Chip is a downloadable application for your smartphone. It works on both Android and iOS.

In order for Chip to analyse your spending behaviour and make savings recommendations, you need to give it access it your bank account transaction data. You grant this in 'read-only' format, which means it can't access your payees, set up payments or make any changes to your account.

Every few days, Chip analyses your spending, and will flagwhat it thinks you can afford to save. You then decide whether or not you want to go ahead with that saving.

Having a conversation with Chip is a bit like texting a teenager. You'll see lots of emojis and when you decide to go ahead and make a saving, it will celebrate by posting up video. Here's one example of what we were sent by Chip when we were about to add a £5saving.

How much interest can I earn?

Chip pays 1% annually. Interest is accrued weekly and paid out every three months.

But there's an innovative way to grow your money - and it's through recruiting other people to join Chip.You'll get an additional 1% (or £10) for every person who joins Chip from your invitation. Once they make their first saving, your interest rate will tick up.

Those extra percentage points last for a year, and you can earn a maximum of 5% in a year.

How much can I save and how to I take money out?

You can save up to £100 a day using Chip, so you won't be able to deposit thousands of pounds to take advantage of the potentially higher savings rates. You can also use Chip when you are in your overdraft.

You can cancel any automated savings suggestions Chip makes, and withdraw your money, which will be paid back into your linked account.

Are my savings safe with Chip?

The savings account you open with Chip is offered by a company called Prepaid Financial Services, which is regulated by the Financial Conduct Authority. However, the Chip small print says that the account is actually an 'E-wallet', hosted by Barclays.

This means that if Chip goes bust, you'll be able to get your money back from Barclays. But an e-wallet isn't covered by the Financial Services Compensation Scheme, so if Barclays went bust, you wouldn't be able to claim up to £85,000 as you would with a mainstream current or savings account.

Plum - automated savings linked to peer-to-peer lending

Plum isn't a standalone app - you chat to the service using Facebook Messenger.

The principle of Plum is very similar to Chip. You need to provide it with access to your transaction data from your bank account, and in order to do this, you'll have to provide your full online banking log-in details. But Facebook won't actually receive any of this data.

Plum then analyses your spending and makes saving recommendations. You can set goals, check your balance and change your savings 'mood', all through sending commands through a Facebook message.

By changing your mood, you either slow down your rate of saving or challenge Plum's to be more ambitious with its recommendations. And while Plum is a little less liberal with emojis than Chip, it will still use them to give you a pat on the back for saving.

How much interest can I earn?

Plum doesn't pay any interest - instead, it puts money aside for you into a savings account so that you can meet your savings goals.

However, Plum has linked up with peer-to-peer lender Ratesetter to offer users the chance to grow their money at a rate of around 3%. This isn't risk-free - peer-to-peer lending involves lending money to people who want to borrow, and they can fail to repay, meaning you could lose money.

Find out more in our guide to peer-to-peer lending.

How can I take money out of my Plum account?

Just send a message to Plum on Facebook saying 'withdraw' and your savings will be returned to you within 24 hours.

Are my savings safe with Plum?

Your Plum savings account is provided bya company calledMangoPay, which is an EU-licensed financial institution and Plum says your savings are held in an e-money account with Barclays.Like Chip, this means there's no Financial Services Compensation Scheme coverage, but Plum stresses that any of your money is ring-fenced from creditors should it, MangoPay or Barclays go bust.

Cleo - a financial friend on Facebook

Cleo differs from Chip and Plum in that it won't move your money into a savings account. Instead, it's designed to help you keep a closer eye on your finances - especially if you spend more time on social media than you do in a bank branch.

Cleo shows your bank balance and categorises your spending through Facebook Messenger - all you need to do is send it a message and your details will flash up.

By using the 'Drilldown' function, you can see exactly where your money was spent over the past week, month or previous month, categorised and split by merchant.

The similarity it shares with the savings bots is that you have to share you banking data with Cleo, again requiring you to enter in your online banking details.

Cleo doesn't offer a savings account or any otherservicesat the moment. But it says that new financial products are coming down the line in the near future.

Is it worth using savings 'chatbots'?

The emergence of artificial intelligence in financial services is certainly intriguing. But these robot savers areclearly designed for people who aren't particularlyengaged with their money.

If you're already in the savings habit, the chances are you already know how to sniff out a good savings deal - either from high-interest current accounts paying up to 5%, or by nimbly moving your money around the best instant-access, fixed-rate or regular savings accounts.

But if you struggleto find space to save among your everyday spending, a savings bot could help you squirrel away some additional pounds, while adding an emoji or two to the process of managing your money.