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AI has various applications in finance, and payments are one of them. While it’s not as explicitly visible here as in other areas, it makes a major impact. How exactly does it affect the digital payments industry? Find it out in this article!
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AI in Banking and Payments Explained
You’ve probably seen multiple instances of artificial intelligence’s impact on the banking sector. However, how many of them referred to payments? It’s not the most popular area to mention, yet AI affects it significantly. Let’s see what particular elements of payments can be improved with it.
Fraud Detection/Prevention
Firstly, AI can be used in payments to detect and prevent fraud… though it’s a bit of an understatement—it’s extremely powerful in this role.
Machine learning algorithms may be fed with historical data and analyse thousands of transactions simultaneously, with all the details included. Based on that, they can flag potentially fraudulent transactions for further analysis by fraud prevention experts. Thus, it should not be surprising that market leaders, such as Mastercard, use AI for this.
Customer Service
We mustn’t forget the use of generative AI in customer service for payments. Chatbots powered with this technology are excellent at solving customers’ issues quickly and accurately. For instance, a chatbot may help your customer set automatic, recurring payments or inform the client when the service is unavailable.
Naturally, chatbots cannot completely replace human customer support, yet they are an asset to any organisation as they make CS quicker, more accessible, and more efficient.
Need help designing a chatbot? See our generative AI services for finance!
Driving Further Developments
Another crucial application may be observed when it comes to innovations. Many organisations in the financial industry leverage AI to analyse the already existing data and develop new solutions based on it. This way, artificial intelligence becomes a driving factor for change, enabling businesses to make fully data-driven decisions.
Payment Orchestration
Sometimes, payments are made via platforms which combine multiple gateways. In such cases, you must orchestrate and merge them into a single access point. This is time-consuming and costs a lot…unless you use artificial intelligence.
AI is the tech you need to boost the efficiency of your payment orchestration. It can integrate different touchpoints easily (automating the process) and create smart routing to ensure that every aspect of each transaction goes smoothly.
Credit Limit Decisions
Credit scoring, and payments are also an inseparable pair. Artificial intelligence may be used to estimate the credit limit for a given client and aid professionals in making the right decision. This is both quicker and more accurate than if done fully manually.
An example of such a system may be observed in PKO Bank Polski. The bank uses advanced ML algorithms for 80% of credit limit decisions. Thanks to this, the bank is able to define the credit score of a client more accurately, and offer them tailored banking products. The algorithms are also used for monitoring the loan portfolio and loan repayments.
The Takeaway
There are many ways to use AI in the payment industry, yet all of them lead to certain goals: quicker, more safe, and more efficient payment processing. Therefore, utilising artificial intelligence in this industry is quite beneficial; if you aren’t doing that yet in your organisation, we recommend implementing AI-driven solutions as soon as possible!
You may also read: Banking Data Analytics with AI
