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Galvanizing Payments with AI

August 30, 2022


The Power of AI in Improving Payments

The capacity of AI to understand human behavior without biases is greater than that of humans themselves, given the algorithm is intuitive enough. This potential makes AI suitable for things such as personalized automation and fraud detection. Read on to know how AI can pull the payments landscape out of flux.

The payments conundrum is not a localized issue but a global one in modern times. Whether for domestic or cross-border payments, every transaction passes through the same cloud infrastructure and is checked by standard algorithms. The profiling of customers owing to their transactional data has helped create many brilliant products and services but has also posed a problem for consumer security. AI-based systems are still at a nascent stage and are only as good as the instructions provided to them. Although machine learning models have been observed to follow a steep learning curve, they have limitations on what they can achieve and how well they perform.

These limitations come in the form of the kind and quantum of data fed to these engines, which impacts the overall performance of the systems. This article discusses how we can make the most of AI to build a robust payment infrastructure.

Limitless Cloud Computing Resources

Cloud computing is a game-changer that has enabled companies to build and deploy applications and services faster, with less up-front investment. It provides limitless storage, processing power, bandwidth, and other resources that can be used on demand. This benefit has made the cloud an essential element of any business model today. For instance, in the payments space—we see banks adopting the cloud to enhance customer experience and engagement by providing newer features like mobile wallets or chatbots, all using their own technology stack. These applications consume a lot of cloud capacity for data storage and analytics as well as machine learning and AI training tasks, which need high on-demand computational power at a low cost (pay-per-use).

To scale a business, there is an inherent need to be able to process more transactions. Unless this scalability is cost-effective, efficient, and secure, there is an excellent chance of losing customers due to a lame customer experience. A cloud infrastructure ensures that the organizational systems handle the traffic as per the estimates and further expands the potential without downtime. The real-time responsiveness of the cloud, coupled with the proposition of cheaper maintenance, makes it the ideal infrastructure for payments. Going by the reports, the cloud is expected to host a whopping 100 zettabytes of data by 2025.

Deep Data Insights in Risk & Compliance

Automating the compliance process has been a long and challenging journey for financial institutions. In general, it’s not easy to find and implement solutions that are not only cost-effective but also deliver real value. The use of AI in this area has helped change that dynamic. AI can help with risk and compliance, including fraud detection and regulatory compliance (KYC/AML). An AI-based solution can automate many risk management and regulatory compliance processes, from data security to internal audits. It ensures that all policies are being followed correctly throughout an organization.

AI’s assistance in improved decision-making is expected to generate $250 billion for the banking industry. This is owed to the fact that robotic engines have a greater computational capability that allows them to run large swathes of data in real-time. This superpower helps them identify risks and bottlenecks in the system way more quickly than humans. AI is an excellent tool for probing absurd information, considering the transforming power of NLP to perform contextual analysis. Predictive analysis is on a whole new level with the use of the AI toolkit.

Enhancing Customer Experience and Engagement

The customer experience has become a battleground for payments. The importance of driving growth through enhanced customer engagement has never been more apparent. Introducing new technologies that can improve how you interact with your customers is crucial to offering the best possible experience. Ensuring this means—leaving no stone unturned in your quest for success and innovation. In today’s digital world, companies are keen to create a great customer experience. It’s not just about sales anymore; it’s about building relationships.

The capacity of AI to understand human behavior without biases is more than that of humans themselves, given the algorithm is intuitive enough. The way businesses operate has changed because they don’t need to do as many hits and trials because of the availability of big data. The key function is now to extract value out of this unstructured data to know what the customers at large really want. While customers broadly offer companies a second chance, they rarely end up promoting them. There has been a 0.88 correlation coefficient between net promoter score (NPS) and CX according to the Qualtrics XM Institute in their Insight report of 2020.

Develop an Advanced Payments Ecosystem

The payments ecosystem is complex, with many stakeholders, each with its own objectives. In addition to effective governance and strategy, there are many ways to enhance the payments ecosystem and improve its performance. AI helps you make better decisions by enabling you to focus on what matters most in your organization.

AI can be used in many different aspects of the payments industry, such as:

  • Improving customer experience through chatbots or voice assistants
  • Enhancing fraud detection capabilities by using machine learning algorithms that analyze patterns in past transactions
  • Optimizing payment flows by integrating AI-based automation tools into your existing technology stack

Customers have a vast array of choices, and the competition is absolutely cut-throat in these times. So, the least you can do for your organization is to not lose out on a prospective customer. AI can perform advanced analytics to identify customer habits that help build a pretty accurate persona. Offering alternative payment options or over-the-top discounts is one way of capturing a customer if they often have a pattern of decreasing cart value. An advanced payment ecosystem has led to a 25% increase in efficiency in payment settlement.

AI is the Holy Grail of Seamless Payments

The future of payments is here. We have seen that AI can be used in various ways with payments, including risk and compliance, customer experience enhancement, and more. Although some challenges need to be overcome before we see this technology implemented on a large scale, it’s clear that the future is bright for payments and their role in our lives. As was seen in the case of tech giants, AI adoption was crucial in building a target customer base; the same holds for the financial industry. The winner takes it all, and the loser leaves the ring.

If you want to stay ahead of the pack in the payments ecosystem, contact us today and we will help you leverage the power of AI.

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