The AI (Artificial Intelligence) technology has gradually streamlined in the corporate world. It not only enables the system to perform tasks without human intervention but also accomplishes tasks swiftly with more accuracy. Take an example of Google Mail. It enables quicker composing of emails by showing predicted texts to the users. However, the sector that has invested the highest amount for utilizing AI technology is the finance sector.
An IDC analysis has stated that financial service providers will spend USD11 billion on AI in the year 2020. As a result, it is expected that AI technology will see exponential growth within the next decade with a focus on digital payment solutions. As per the projection, the AI market will achieve 127 percent y-o-y growth by 2025. This growth is already visible in the digital payment domain. Let’s understand how AI transforms the way we use digital payment solutions.
Impact of AI in Digital Payment Sector
- Virtual Financial Assistant
AI gives useful data about the user’s priorities, goals, and habits to financial companies. Many banks and financial institutions provide financial assistant in the dedicated mobile app to lead the user toward financial freedom. The AI technology powers the financial assistant. What’s more, some mobile wallet apps send notifications to the users for paying utility bills and making recurrent payments. This is also an AI-supported feature.
In a way, AI enables the users to track and manage savings in the mobile wallet app.
This is not a new concept because AI-based chatbots are commonly used in various business websites and enterprise apps. The mobile wallet app development companies have started integrating AI-supported chatbots in the apps. These banking chatbots are proven very handy for banking customers because they can resolve payment-related issues and queries quickly. What’s more, the banking chatbots are active on a 24/7 basis.
The Bank of America was the first major bank that has integrated the AI chatbot knows as Erica in its system. Erica enables users to manage their finances in a better way.
- Fraud Detection
One of the major reasons for the growing popularity of a digital payment solution as it offers swift and secure online transactions. One of the most popular ways for digital payment is the mobile wallet app. It has transformed the concept of online shopping as many eCommerce companies have integrated mobile wallets in their dedicated apps. Amazon Pay is a popular example of it.
Another big use of the mobile wallet is in on-demand apps. However, this advancement of payment technology is prone to cyberattacks, especially when there is a lack of real-time fraud detection techniques. It is fair to mention that humans alone cannot manage these many online transactions and make them free from frauds and errors. There, AI comes into the picture.
As per the official report on global digital payments, the number of digital transactions will reach approximately 726 billion by the end of 2020. Banks, financial institutions, and industries count upon the AI technology to manage these transactions because AI and ML (Machine Learning)-based techniques can help them monitor transactions in real-time. AI monitors transactions quickly and accurately to reduce the occurrence of fraud. It is easy for users and banks to identify illegal or suspicious transactions using AI.
- Personalized Services
From messaging chatbots to personal recommendations, AI can make the digital payment industry more user-centric. The messaging chatbot can be integrated into the digital wallet app to assist customers to accomplish transactions in a seamless and secure way. Retail, eCommerce, and hospitality industries can also leverage the benefits of AI-powered chatbots to assist their customers.
What’s more, Machine Learning technology makes chatbots more human-like in interactions and enhanced accuracy. Chatbots can study the interests of users and make useful recommendations to the users in a personalized way. In brief, chatbots can complement the services offered by digital wallets.
Another personalized service offered by AI in the digital payment solution is facilitating the user to measure their score more accurately. Let’s understand this from the example of the FICO score. In the US, lenders consider the FICO score to measure the creditworthiness of individuals. However, there is a lack of context applied in the scoring process, and as a result, the FICO score has a shortfall.
The machine learning-based algorithms enable lenders to analyze the individual’s data with more accurate predictions. This can simplify the loan process and finance institutions can disburse the loan speedily to eligible people. In brief, various financial institutions can use AI technology to analyze their customer’s behavior and spending or investing-related habits. They can design personalized services based on AI-powered recommendations and assist their customers to achieve their financial goals.
- Decrease in False Declines
False declines are quite common at the checkout system during the online or in-store transactions. An official survey has revealed that $118 billion of false transaction declines occur in the US every year. Such transaction declines bring embarrassment for customers who do not have good creditworthiness. Also, these declines are inconvenient when occur in-store. It can ruin the customer experience and reduce the customer’s loyalty to a particular company.
An AI pattern, based on identity skills and device study, can prevent false declines through real-time authorization. MasterCard is planning to implement this system. If this concept works well, finance companies and retailers can offer a more enjoyable shopping experience to their customers. The digital payment solution needs to swift, secure, and hassle-free for the users, and AI can help achieve this objective.
Informed Decisions through Actionable Insights
AI is designed to offer actionable insights based on real-time, accurate analysis. The mobile wallet app development company can integrate AI-based features to make the app more user-friendly, secure, and highly efficient. AI technology helps companies improve the efficiency of operational services irrespective of the business model and industry type. Reduced payment processing time and automated insights of users are two major advantages of AI that can be leveraged by AI feature integration in payment solutions.
Companies can restructure various procedures and working models with the help of AI technology. The AI concept can assist the users to make informed decisions regarding their investment through quantitative techniques and analyzing big data. In brief, AI can streamline the process and make the overall user experience to a new level while advancing the digital payment industry in the year 2020 and beyond.
- Top Five Ways AI Transforms Digital Payment Industry in 2020 - August 12, 2020