Banking will never be the same; Ways AI and RPA (Robotic process automation) Improve Digital Payments

Introduction

5 Ways AI and Machine Learning Improve Digital Payment Technology

The financial industry has taken huge leaps forward when it comes to strengthening its digital payment ecosystem. Technology and digital transformation is changing EVERYTHING.

According to PwC, nearly 81% of banking CEOs are concerned about the speed of technological change, more than any other industry sector. They are CONCERNED about it.

Technology is changing banking and the payments industry at a VERY FAST RATE.

Traditional Banking will soon be OVER.

Innovative payment options today are driving competition and rapid changes in the payments and banking industry.

Real time, fast and secure payments are crucial.

According to IBM, 'financial institutions serving these customers are looking at ways to offer flexibility and added-value in terms of speed, revocability, efficient routing, transparency, fees, traceability and liquidity – leveraging next generation technologies. Internally, the challenge to maximize efficiency and keep costs as low as possible while also maintaining maximum security levels has also increased.'

AI technology is helping financial institutions in five different ways, which I have highlighted below.

Real-time fraud detection

Digital payments have resulted in an ease of accessibility. This has not only helped customers make transactions easily but this has also increased fraudulent activities. Fraud detection systems that run on machine learning and AI are better equipped to handle a surge in online transactions and detect illegal and suspicious activities or transactions. The data can be collected in real-time and business owners can perform payments analysis.

AI-driven Chatbots

AI driven chatbot systems are known to assist businesses that are looking to convert visitors into paying customers. How? Chatbots achieve that by enhancing customer experience. They allow businesses to respond quickly to queries and enable easy communication. Chatbots can handle queries regarding a transaction, account balance, or account safety. Thus, AI has allowed businesses to manage time and customers with maximum effect.

Effectively avoid false declines (false positives)

According to fcase, 'a false positive is when a legitimate transaction is flagged as suspicious, shutting down the payment or locking an account down completely, in other words, a user is incorrectly identified as a fraudster. These errors occur when a non-fraudulent transaction somehow triggers a bank’s fraud detection system resulting in the bank denying the completion of the transaction.'

Some false detection systems that exist in financial institutions aren’t capable enough to tackle the ever-growing amount of online transactions. Some of these systems may cause disapproval or rejection of legitimate transactions which is annoying for the customer. Lloyds bank reports that fraud costs e-commerce merchants 7.6% of their annual revenue and false positives cost them 2.8% of revenue. KPMG’s 2019 global fraud survey notes that false positives are negatively impacting banks which in turn hurts the e-commerce market.

AI however, when used successfully, helps improve these false detection systems by simplifying the overly complicated protection layers of security. It allows clear identification of both fraudulent and legitimate transactions - helping customers and business owners prevent loss of time and money.

AI helps to personalise digital payments

We talked about chatbots and how they use AI technology to improve customer experience. There’s another way chatbots have helped boost digital payment systems - With the help of AI, chatbots have been able to collect customer data related to interests, concerns, and demands. The data is then processed by AI algorithms, which then helps a digital payment system provide personalised recommendations to the end-user.

Improved infrastructure & intelligent payment route selection

In simple terms, bank transactions usually occur through a process called payment routing, which works via a payment network used by both the cardholder and the acquiring bank.

The ongoing procedures to make digital payments require a smart system that can keep track of all the factors that are involved in a digital transaction. Some of these factors include security, user experience, functionality and data integrity. This is all about the infrastructure. Of course, accessibility is so important too. You want to be able to reach global customers who can pay for services and goods digitally.

Artificial intelligence can be used to develop a system that considers some of these factors and creates a smart route that can ensure safe and successful transfer of payments.

This will consequently improve user experience and further enhance customer loyalty. RPA (Robotic Process Automation) and AI when used together are great power tools.

To go into this deeper, according to IBM, 'with the ever-growing payment options and requirements, bank customers – especially commercial ones – can feel pressure to expend more resources and capital to manually route payments resulting in process inefficiencies and burgeoning costs.' IBM mention that banks can, 'deliver value by applying RPA to intelligently route payments for its customers through optimal schemes, helping them better manage payment commitments, optimize working capital, reduce transaction costs and maximize information transfer in order to lower reconciliation costs.'

IBM believe that this will be a key differentiator in banking services as, 'emerging payment options like real time payments will be commoditized over time. Banks who jump on the intelligent routing bandwagon early may realize growth and retain their customers with value added services offered on top of existing services.'

With tech advancements growing rapidly, we could even see voice activated payments and biometric payments all becoming more mainstream...

In addition to this, I am keen to see how the banks and fintechs will continue to tackle the foreign currency/ foreign exchange (FX) challenge in digital payments. Foreign exchange rates can be a concern. How much AI will be used to tackle this problem?

Written by Faye Eldridge, Marketing consultant, tech and fintech. In partnership with #Payfuture, https://payfuture.net.

PayFuture is an AI technology based innovative payment gateway connector offering the ability to connect to multiple local payment solutions across multiple global emerging market regions. Using one simple API you simply use PayFuture’s switch/connector gateway function to access all emerging market country’s local payment options giving you instant availability to the most popular payment options per region.