Using AI Intelligently: Smart ways to use Artificial Intelligence in Payments

What is artificial intelligence?

Introduction

The concept of artificial intelligence (AI) has been around for a long time and is now making major inroads into financial services. AI has a significant impact in areas such as fraud and compliance, credit scoring, financial distress prediction, robo-advising and algorithmic trading in many financial services firms. For example:

• 70% of all financial services firms are using machine learning to predict cash flow events, fine-tune credit scores and detect fraud
• 54% of financial services organizations with 5,000+ employees have adopted AI

This is because AI can carry out processes at scale faster and quicker than humans. It can also make inferences that a human would miss when it comes to spotting patterns and linking up seemingly disparate sources of information. However, the application of AI in payments has not been well researched, nor is its application in payments well understood.

Fable Fintech, a Community Patron of the The Payments Association specialising in international remittances, commissioned this whitepaper to address this shortfall, for which the payments community is grateful. We also appreciate the input of those attending two CEO Round Table workshops, where the potential of AI in payments was explored. Their input into this research was both formative and essential.

Drivers of AI

The business drivers of AI technologies are:

• Boosting revenues through increased personalization of services to customers and employees. One of the most powerful enablers of a strong customer experience is personalisation. By leveraging different types of AI, companies can unlock insights into consumer behaviour. This allows for tailor-made decision-making and the ability to offer what a customer wants and needs at the point when they need it.
• Lowering costs through efficiencies generated by higher automation, reduce error rates and improve resource utilisation. Better processes and efficiency also contribute to customer-centricity – increasingly so as banking and investment products have become largely commoditised. AI-powered analytics can improve how these services are delivered, providing differentiation and contributing to a competitive edge by enhancing customer experiences. More than 50% of 2,056 recently-surveyed IT and line of business decisionmakers and influencers say that customer experience is their leading driver for AI adoption.