Technology Updates: Flustered by jargon in financial documents? Digital tool Redflags aims to be go-to guide

Source:

https://www.straitstimes.com/tech/concerns-over-investment-linked-plans-behind-redflags-a-digital-tool-that-dissects-financial-papers

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Young consumers often struggle to understand complex financial documents, leading to costly mistakes. This was the experience of 25-year-old Teo Yi Ki, who bought an investment-linked insurance policy (ILP) with her first pay cheque, only to later discover restrictive terms. Her experience inspired her and five teammates to create Redflags, a digital tool designed to simplify financial jargon and highlight key details in product documents.

The team met during the Sparks x Build for Good Community Hackathon in June 2024 and built Redflags using Google’s Gemini large-language model, strengthened with guardrails to ensure accuracy. The tool analyses documents, summarises them, and categorises information into high, medium, and low importance based on advice from senior financial experts. Critical details like fees, coverage, risks, and returns are flagged in red, while disclaimers and administrative notes are ranked lowest. Importantly, Redflags does not judge products as good or bad but instead empowers users with clarity.

A Straits Times test of a 31-page ILP summary showed how Redflags translated dense terms into plain language, explaining risks such as potential capital loss and high costs of early termination. The tool revealed 18 key points of high importance in that document alone.

The launch comes amid rising concerns about ILPs. Complaints to the Financial Industry Disputes Resolution Centre surged from 55 in 2023 to 211 in 2024, many citing mis-selling or poor disclosure. A survey by the Redflags team found young adults often skim contracts and struggle with hidden fees and jargon.

Looking ahead, Redflags aims to partner financial advisory associations to enhance credibility and may eventually connect users with trusted advisers, helping make finance more transparent and less intimidating.