Financial services companies will spend $11 billion on artificial intelligence in 2020, according to an analysis by IDC.
It’s money well spent in the payments industry, which recognizes all of the possible opportunities, including fighting fraud, streamlining underwriting, and improving the user experience.
But what does the future look like? In the near and distant future, consumers and merchants can expect AI and other similar technologies to take on some of the most challenging issues in the sector. The opportunities are there; the payments industry merely has to take advantage of them.
Combating Fraud in a More Intelligent Manner
Everyone in the payments industry knows that it is much more difficult to fight fraud to originates from a cardless transaction. Thankfully, artificial intelligence and machine learning have become valuable tools for payments companies and financial institutions to reduce fraud in all types of landscapes, including those that work exclusively online.
Since every transactions made include a large amount of data, AI and machine learning can be trained to search quickly and efficiently for anything that doesn’t appear to be authentic. Additionally, they can be used to look for a number of factors beyond, time of purchase, velocity, and ticket amount.
Systems also can build on the data that they get from each transaction. This allows companies to improve constantly and, in the end, become more effective.
AI Can Streamline Underwriting
AI and machine learning can be very helpful tools for payments. Algorithms can be taught to underwrite merchants that banks are onboarding in real time. Also, the systems can be created to adjust for increases in chargebacks and bumps in incidents of fraud. Fortunately, this creates a secure payments landscape and helps fintech companies protect themselves from losses due to fraudulent merchants in ways that would be never be possible without this technology.
Most importantly, AI solutions for fraud are on the back end, so it never interrupts the user experience. Instead, the experience becomes streamlined, easy, and safer for all parties involved, including consumers and merchants.
AI Can Improve the Overall Customer Experience
Chatbots, which use natural language to conduct conversations with consumers, will help improve the customer experience. The use of chatbots offer companies a way to offer customized and personalized services in highly automated, highly scalable ways that can only improve customer service.
The Last Word
AI can push digital transformation for merchants for any size by taking payment information and using it to its full potential. Algorithms can evaluate transaction information for patterns, including changes in inventories and periodic slumps in revenue. This information will allow merchants to plan for these challenges. Additionally, artificial intelligence can help merchants recognize targeted marketing opportunities, including incentive and rewards programs.
Artificial intelligence is a promising innovation for those in the payments industry. It is a valuable tool that will continue to provide stronger payment products with a more secure ecosystem that steers shoppers and businesses toward more digital commerce opportunities. In the end, AI can only bring good to the payments industry. What the individual players do with it in the future will be the most exciting part.
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