7 Applications of Artificial Intelligence in Digital Payments

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Introduction

• Artificial Intelligence (AI) comes across to many
  as an extremely complex topic. However,
  understanding the concepts of how AI works, and
  what it intends to do, is fairly simple. At its
  core, AI development is about computers and
  systems, being able to perform tasks, that would
  usually require the input of human
  intelligence. One example of this is Google mail,
  enabling quicker composing of emails by
  predicting what you are going to say next. Now,
  lets dive into what are the applications of
  Artificial Intelligence in Digital Payments.
• However, the industry that is so far the most
  invested in AI development is the financial
  industry, with a particular focus on payments. AI
  technology is expecting to see exponential growth
  in the finance industry within the next 10 years,
  and signs of this are already visible. Being one
  of the crucial aspects of financial technologies,
  AI, coupled with ML has several use cases in the
  finance industry.

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Applications of Artificial Intelligence in
Digital Payments
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1. Artificial Intelligence in Debit Cards
Dough, a FinTech start-up, built an AI engine to
help Choice Financial was planning to integrate a
new digital bank account and debit cards with
Artificial Intelligence in payments. Instead of
launching the product by themselves, they reached
an agreement to partner with Dough. The two
companies will soon launch a debit card under the
Dough brand, with the card having an AI
virtual-assistant called Sophie. With the help of
Choice Financial, Dough have been able to expand
their business greatly since their launch in
2016. 
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2. Banking Chatbots

• The integration of artificial intelligence in
  banking chatbots is eventually going to become an
  expectation of banking customers. Although some
  innovative firms have already started to
  implement chatbots, their usage is yet to become
  mainstream.
• Chatbots integrated with AI will help users to
  receive faster responses to solve their payment
  issues and queries. Example queries would be the
  format an international payment should be to
  reach the recipient successfully. Another
  scenario could be an investigation about a
  missing payment.
• The Bank of America was the first major bank to
  integrate chatbots into their systems. They
  have named this AI chatbot, Erica. The intention
  of Erica, is to allow users to better manage
  their finances. This will be achieved through
  chatbot voice and text interactions that resolve
  queries and provide suggestions.

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3. Fraud Detection

• In current times, payments take place in
  real-time, therefore, we need real-time fraud
  detection techniques. The management of these
  transactions to eliminate fraud and errors by
  humans alone is becoming nearly impossible. A
  significant reason for this is the volume of
  online transactions that take place. According to
  the latest reports of global digital payments,
  the volume of transactions will reach a milestone
  of approximately 726 billion by the end of 2020.
• This is why Banks are starting to investigate how
  they can use machine learning and artificial
  intelligence in digital payments, to help the
  fight against payment fraud and other means of
  fraud. The hope is that artificial intelligence
  and machine learning will help banks to rapidly
  monitor all data of transactions in real-time.
  This in turn should eliminate, or at least
  significantly reduce the occurrence of fraud from
  transactions. AI in payments will also help users
  and bank systems to spot illegal or suspicious
  transactions.

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4. Reduced False Declines

• They are instances where the layered transaction
  protection put in place to reject suspicious
  activity, can actually cause great inconvenience
  to innocent customers. This unfortunate situation
  usually occurs at the checkout system online or
  in-store. When this occurs in-store, not only is
  it inconvenient for the customer, but it can also
  bring embarrassment. The effect on the economy is
  even grander.
• Researchers have concluded that 118 billion of
  false transaction declines take place each year
  in the USA alone. Much of these funds are never
  put back to the retailer. This is because of the
  reduction in customer loyalty and trust as a
  result of this customer experience. Through
  the use of AI pattern identity skills and device
  studying, MasterCard is planning to facilitate
  actual real-time authorization to prevent the
  occurrence of these false declines. If this
  works, it will provide a much more enjoyable
  shopping experience for buyers.

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5. Personalized Services

• With the help of Machine Learning, chatbots will
  observe the activities of humans. This will
  involve studying their interests, and making
  personalized recommendations of products that the
  user will find useful. This is in addition to
  enabling payments to be made through the apps
  API. These personal recommendations of products
  and services is a great showcase of Artificial
  Intelligence in digital payments.
• Moreover, artificial intelligence in digital
  payments is also allowing the lenders to have a
  look into the users creditworthiness to help
  them score credit more accurately. In the United
  States, lenders currently use the traditional
  FICO score to identify the credit score of an
  individual.

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6. Increased Automation for Better Insights

• There is no doubt that the impact of Artificial
  Intelligence on the payment industry is
  incredibly exciting. From changing the way how
  people invest their money, to making the
  borrowing process more accessible to the public.
  AI in payments will bring a huge impact on global
  economic scenario.
• One of the major advantages of artificial
  intelligence in payments is that it helps
  companies to vastly improve the efficiency of
  their operational services. This is achieved
  through reduced payment processing time and
  providing automated user insights that are highly
  accurate.

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7. More Informed Decisions

• AI in payments has the capacity to help guide
  making investment decisions through quantitative
  techniques. In particular through the analysis of
  big data. An increasing number of teams from key
  market players in recent years have adopted big
  data.
• Big data collects information that can be
  leveraged by investors to make informed choices
  on key issues. However, the time taken to analyze
  big data is extreme. Therefore AI is required to
  streamline this process. As this method to obtain
  information improves, this will of course
  increase the number of adopters in the coming
  years.

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Conclusions

• Many industries have already started to extract
  the potential that Artificial Intelligence holds
  for them. It seems inevitable that the payment
  industry will be heavily affected by AI in a
  variety of positive ways. Since the future of the
  technology holds even more potential, the value
  AI software development brings to FinTech could
  be more than anyone has envisioned. This is just
  the beginning of the positive changes that AI can
  bring to various industries, especially for the
  payments industry. 

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Thank You

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