How will AI transform the payments industry?
Generative artificial intelligence (Gen AI) has been the hot topic for 2023, capturing our interest and imagination across all industries. The financial services industry is no exception, but how is this technology tangibly impacting the fintech ecosystem?
To find out how Gen AI will transform the payments industry we asked Anthony Jones, Head of Digital Partnerships, Visa Australia, New Zealand and South Pacific.
The rise of platforms like ChatGPT has made Gen AI accessible to the broader population and encouraged rapid adoption in people’s work and home lives. It took ChatGPT only two months to reach 100 million monthly active users – a sharp contrast to the likes of TikTok and Instagram which took nearly five times as long.
However, what can be overlooked during this rapid uptake is that AI has been playing an active role in payments and financial services for many years. For example, fraud detection and prevention, frictionless transaction authorisation, and AI-powered chatbots. There’s enormous potential for AI to be integrated into a wider spectrum of payments solutions and services.
In 1993, Visa became the first network to deploy AI-based technology for risk and fraud management, pioneering the use of AI models in payments. Today, Visa’s Advanced Authorization combines our proprietary online authorisation model with offline neutral network-based machine learning to evaluate risk across the entire network in real-time, helping to prevent potential fraud before transactions go through. Visa Advanced Authorization is estimated to have helped prevent $27 billion USD in fraud globally last year.
During the last ten years, Visa has invested more than USD$3 billion in AI and data infrastructure to enable the safer and smarter movement of money while proactively detecting and preventing fraud. Our commitment to developing pioneering technologies and applications extend to the investment in the next generation of companies, with a new $100 million USD Gen AI ventures initiative announced in September this year.
While it’s apparent AI can unlock tremendous business value, it’s critical to acknowledge that managing responsible AI programs comes with a unique set of ethical and governance responsibilities. The financial services industry’s trust has been hard won, so the onus is on all of us to collectively think deeply and holistically about AI so we don’t jeopardise this trust.
Based on the unique characteristics of our sector, some of the most impactful areas where Gen AI can help include:
1. Customer Acquisition
Gen AI can be used to analyse vast data sets around market trends, competitor activities and consumer behaviour. This effectively promotes a better understanding of the market and its hidden nuances while discovering unmet or underserviced needs to guide new product and experience design.
2. Customer Engagement
Gen AI can craft compelling messaging and marketing based on each customer’s spend behaviour and preferences. Subsequently, a highly personalised service can be provided, enhancing loyalty offerings and managing the customer lifecycle.
From the consumer’s perspective, for example, this may come in the form of gift suggestions based on a short prompt, including a bio and social media handle. Or it may be an AI-powered personal assistant to help plan travel, suggesting the best flights and accommodation for either a holiday or business trip.
3. Customer Experience
Gen AI can potentially be applied to existing transaction models to improve authorisation rates for customers. This can be applied at a more granular level than ever before, to help combat fraud and provide the best customer experience. Gen AI can also be integrated into other product offerings, empowering business owners to query their business analytics using natural language instead of written database queries.
As Gen AI continues to alter the payments landscape, the reality is our industry will encounter unique challenges along with new and exciting opportunities. Regardless, it’s critically important to be able to deliver the promise of AI to our customers safely and responsibly while elevating performance.
We see Gen AI as a transformative force in the world of payments and commerce, enabling faster access to critical information and better decision making. There’s a real opportunity for us to collectively bring this future to life. As a pioneer in AI in using AI in payments, Visa is excited to work with our partners across our network to drive the next phase of innovation.
by Anthony Jones, Head of Digital Partnerships, Visa Australia, New Zealand and South Pacific.
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