By definition, artificial intelligence (AI) is any device that can mimic cognitive functions like that of a human mind in order to accomplish a task with success. In other words, AI is a machine that can problem solve to achieve an end goal. It is already making a huge impact in finance and banking sector- this includes the payments industry as well. It can safely be said that it is capturing the interest of companies worldwide.
The payments landscape continues to swiftly grow, driven by evolving technologies and digital transformation across industries. It’s already clear that digital commerce has expanded beyond the desktop and even beyond mobile. As the Internet of Things (IoT) continues to expand and consumers become connected at every level — from devices to clothing and appliances — the ability to pay anywhere at any time will become more ubiquitous. Artificial intelligence will amplify and accelerate this reality, using the power of machines to streamline payments at every level.
Let’s take a closer look at AI is increasingly making in-roads into payments.
AI is especially important now than ever, in fraud detection as there is a significant shift to e-commerce and other remote “cards, not present” transactions where fast approval is needed- yet the customer’s physical card is not available for additional verification. Plus, due to the significant change in immediate payment systems (which correspond to requiring faster identification of potentially fraudulent transactions), the importance of fraud detection is driven up. Using the Machine learning’s algorithm to derive insights into which correlation of variable lead to a fraudulent payment. The systems use rule-based logic to block the transactions that have the highest probability of being a fraud. Albeit, professional con-men are fast at detecting when their payments are being blocked and switch to a new merchant to continue their scheme. Combining the forces of ML and AI, historical data can be used to identify patterns associated with fraud and make quick adjustments to their algorithm’s and rule-based logic without human interference.
Increased automation leads to better insights
The impact of AI is felt strongly across the payments landscape, from changing the way people invest their money to automating the borrowing process; a huge development for those who’ve previously been overlooked as a result of cumbersome challenges and infrastructures. A key benefit of AI is that it can help payments companies dramatically improve operational efficiency, examples include: reducing processing times and human error, as well as providing user insights and increased automation. In this sense, AI is helping businesses to reimagine and restructure operating models and processes. For example, it can support businesses in processing huge volumes of data to generate financial reports and satisfy regulatory and compliance requirements; processes that would typically involve large numbers of people performing repetitive data processing tasks.
Enabling more informed decisions
Both AI and Machine Learning are helping to support investing decisions which are data driven. Quantitative techniques and new methods for analysing big data have increasingly been adopted by key market players in recent years. And as the quantity and the access to data available continues to grow, it will continue to impact how investors look to leverage data analysis to make more informed decisions. The lending industry has the potential to achieve massive operational and strategic efficiencies by implementing Machine Learning, with many key players expediting the lending process using Machine Learning and big data analytics. It’s already being used in all types of verticals from retail to healthcare, and across the financial services industry more broadly it can replace older statistical-modelling approaches with new and innovative techniques.
While there’s still a long way to go before AI-based tools and algorithms control our financial systems, the fintech sector is starting to use the technologies in diverse and creative ways. The crossover between AI and fintech comes at a stage where AI is creating disruptive technology for the consumer. Payments and digital transactions are key areas for successful integration of AI services to improve customer experience. Fortunately for customers, major industry players in the payment industry have their eye on AI- their involvement in the revolutionary change may have a positive