There was once a time when the words artificial intelligence, or AI, were only used in talks of “futuristic” inventions that one could have only imagined. Now, AI is a very real type of technology that is changing the way businesses operate, especially in the payments industry. In 2016, funding in AI startups had already reached $5.021 billion, a large increase from just under $600 million in 2012. Now, financial institutions and payment processors around the world have AI technology at their fingertips and are using the technology to make their services faster, smarter, more efficient, and most importantly safer.
Within the payments and financial industry, AI has many different applications. To understand the possibilities with artificial intelligence, we must first understand the main genres of AI technology:
- Machine Learning – software models that evolve in response to incoming data over time.
- Vision Recognition – allows software to identify objects.
- Natural Language Processing – allows a machine to understand spoken questions or commands.
- Bots – hybrid apps that present as being human but are completely automated.
Together, these kinds of AI technology offer payment service providers and financial institutions the opportunity to evolve nearly every aspect of their businesses.
Machine learning is arguably the biggest opportunity for not just the payments industry, but all other industries. The more that software knows about a consumer, their habits, and the industry, the better a service provider or institution can serve them. Machine learning has also made fraud detection and prevention much easier for those in this high-risk industry through bots that can easily identify and flag suspicious activity.
The most common use of this AI technology is in authenticating purchases or other transactions. Today, consumers can use fingerprint or facial recognition to verify their identity when making mobile payments. Square has even developed software that allows merchants accepting payments on a mobile device to verify the legitimacy of credit cards.
Natural Language Processing
Automatic speech recognition has been a popular technology for years, with developments like Apple’s Siri leading the pack. Now, with products like Amazon’s Alexa, consumers can even make purchases with only audible commands. More specific to the payments business, apps like Square Cash, Venmo, and soon Siri can facilitate peer-to-peer payments simply based off voice command.
Bots are unique in the sense that they typically utilize other kinds of AI to carry out their duties. The most popular instances of this technology in the payments industry is in the use of chatbots. These automated systems utilize machine learning to mimic a human response to questions or commands, whether verbal or via text. These bots are being used in a wide variety of applications, including Facebook Messenger, where you can initiate a payment to a Facebook friend just by telling the app to pay the person and what amount.
AI bots are also allowing many companies to provide a much better customer experience. With this technology, companies can allow their consumers to make payments, change account information, get customized quotes, and more through customer service technology that replaces a human. This means less time limitations and more cost savings for companies who need to focus on other functions. With AI bots, businesses can create a much more personalized experience for their customers.
The Future is Bright
The payments industry is really embracing artificial intelligence and continuing to find ways that the technology can make payments even better and more secure. Although the new developments take time and money to put in place, the cost savings and efficiency this technology offers is well worth the investment. As our society becomes increasingly reliant on smartphones and kiosks, the opportunities to put payments technology in the “hands” of AI are growing. Consumers are growing accustomed to digital transactions and their willingness to interact with technology instead of humans is more than ever.