How Artificial Intelligence (AI) Can Revolutionize Payments Industry
Artificial Intelligence (AI) is intelligence demonstrated by computers and programmable machines to accomplish a given task (as per the Wikipedia). It makes computers perform tasks that, otherwise, require human intelligence. Given the numerous applications of AI-based applications, it is increasingly becoming more and more ubiquitous, positively impacting all kinds of businesses including payments industry. Last five years have witnessed increased investments in the AI-based application as the industry and customers are becoming comfortable with AI in their day to day life. Industries, businesses, and governments are collecting massive amounts of data, that can be transformed into meaningful analytics using AI technologies, as most consumer interactions are now digital. By 2020, worldwide customers using Digital Payment is expected to cross 2 billion. AI and related technologies are bound to disrupt the way payments industry innovates in terms of ease, efficiency, user experience, security and risk management. AI will power the customer experience from behind the scenes, revolutionizing multiple aspects of payments. The article highlights key payment industry related business areas that AI will revolutionize and redefine.
Fraud Prevention and Confidence
Building With the maturity of digital payments, card-not-present transactions are getting matured too, so is the newer opportunity for frauds. AI together with Machine learning (ML is the core mechanism that is used by computer systems to learn and simulates human behaviour) cannot only help detect a probable fraud but also prevent it before occurring. Computer systems will rely on the power of patterns and anomaly detection using AI and ML. The AI/ML-based fraud management systems will be based on rules human brains deploy to detect an anomaly and then continue to learn to become more efficient through supervised learning.
The application of AI to Digital Payments will build the trust and confidence between the service provider and the customer leading to the better and faster adoption of the digital payments.
Predictive Analytics for Business Insights and Enhanced Customer Experience
Predictive analytics is - the use of past data, algorithms, to identify the likelihood of future outcomes. AI can power predictive analysis which will not only help in identifying the probable future frauds, risk but also help in providing personalized services to the customers. Aided by the information on customer spending behaviour, systems can predict the needs of the customer and push relevant services to them. This will lead to increased engagement, stickiness, and improved revenues. The business will also be able to identify the need and potential for newer business services.
Virtual Assistant for Personalized Service and Stickiness
Personalized customer service is one of the key pillars of financial and payments industry. It is an essential ingredient that builds stickiness. Approximately 5-6 percent of the business revenues are invested in customer service in the payment and banking industry. An AI-based Chabot will not only reduce the spending on the human resource but also eliminate waiting time for being serviced, provide a personalized experience and, hence, create amazing customer engagement.
Better Operational Efficiencies for Improved Profitability
AI can also help payments providers in improving the operational efficiencies by minimizing human involvement and by minimizing human errors by automating payments processing. Large volumes of transactions can be automatically processed by applying AI principles,which, otherwise are processed by humans. AI can also automate the routine jobs of processing compliance reports and statutory reports based on large sets of data. AI will also help eliminate the routine/recurring jobs, that are typically outsourced, by automating them, leading to huge operational cost saving for the payments companies.
The primary reason for delay in fulfilment of the payments/financial services can be attributed to human intervention and human errors. AI can eliminate both human interventions and human errors, making the fulfilment faster and more efficient. Processes like eKYC, loan approvals, credit management, investment, wealth management can be automated using AI, leading to significant value-add to the customers experience.
Every payments organization will need to undergo an in-depth analysis of its processes, people, regulatory framework and customer behaviour to understand the applicability of AI for optimal benefits. AI may fit in certain areas while it may not in certain other areas. For every applicable area, companies must determine the value AI creates for its customers and business in the long run and the associated cost savings, before making a decision for or against AI. It’s clear that AI has come a long way in the last half a decade. It has been adopted across the breadth of industries transforming legacy processes and providing an enhanced experience to customers. Given, what industry has already achieved by adopting AI, the possibilities for the future are endless.