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AI is the Game Changer for the Digital Payment Industry

October 25. 2022

AIOps solutions are benefiting almost every industry. New age technologies like AI, ML, RPA, and IoT have applications in every industry. Similarly, the banking industry is also leveraging the power of these next-gen technologies. In the past few years, demand for digital payments surged among banking customers. India, USA, and China are the top countries with more than 15 billion digital transactions annually. How do banks ensure that the digital payment demands of customers are met? AI is helping banks to develop digital transformation services and solutions related to digital payments. Read on to understand how AI is changing the digital payment sphere.

Digital payment is not limited to traditional banks

Banks are not the only ones using AI-led digital payment solutions. The success of digital payments depended on how quickly non-banking institutions adopted them. Besides banks, NBFCs and fintech companies also leveraged the power of digital payments. As a result, there are many digital payment options for banking customers. People can make a digital transfer with a payment channel, a fintech application, or other sources. Even businesses are adopting digital transformation services and solutions to offer digital payment services to customers. Many companies have separate digital payment interfaces for their customers. Digital payments aren’t limited to traditional banks around the world. Let us now understand the changes brought by AI in the digital payment industry.

Prediction of the cardholder behaviour with AI

While making a digital payment, people can use their credit/debit card details. Once their card details are saved on a payment channel, they do not have to enter them again. Any digital transaction will be initiated within seconds as the card details are saved. Card issuers can predict customer behaviour and spending habits with the help of digital payments. When all customers pay in cash, credit card issuers or banks will not know where they spend their money. However, the same is not the case with digital payments via a credit/debit card.

Banks collect digital payment info and develop credit scoring models. Credit card issuers are developing transaction-driven solutions by knowing customer preferences and spending habits. Behavioural scoring based on customer interest was not possible before the digital payments. An AI-based solution can monitor card behaviour without any human interference. You must have heard about predictive analytics models that can remember everything. Similarly, AI-based solutions can remember customer behaviour and suggest products or marketing campaigns accordingly.

Fusion of digital payments and social media apps

Since AI is revolutionizing the digital payment industry, how can social media sites run behind? Social media sites are quick to jump on any trend and retain their customers. With the help of AI, social media companies are now integrating digital payment options with their mobile applications. WhatsApp Pay is a prime example of a merger between social media and digital payments. Many other social media companies are following the trend and allowing users to buy/sell things via their platform.

With the help of AI, social media sites are indulging in conversational commerce. With conversational commerce, brands can communicate with customers while they shop. Representatives and AI-led assistants are used by brands to interact with customers in real time. With the help of AI, brands are making digital payments easier for people. Earlier, customers had to open a social media app or a fintech application and make digital payments after a few taps. With the help of conversational commerce, brands are now allowing customers to make payments via voice, chatbots, and messages. In the coming years, the line between chatbots, AI assistants, and human representatives will be blurred, due to AI advancements.

Fraud prevention with AI

Most people still don’t use digital payment solutions. They debate that online payments aren’t secure, and cash is king. To some extent, things are true because there are many scammers and malicious actors. However, theft risks are also associated when dealing in cash. In the past few years, digital payment providers have worked intensively towards boosting security. They are now deploying AI-powered security solutions that track user behaviour in real-time.

Security & compliance have always been major headaches for digital payment providers. With AI-powered solutions, digital payment providers are looking to mitigate security concerns. Customers will receive real-time alerts about an unauthorized payment/transaction. AI security and proactive application monitoring can track user behaviour over a period. Since it remembers the spending pattern, it will raise red flags whenever an abnormal behaviour is detected. When customers know about fraud proactively, they can take appropriate action.

Compliance with AI in the digital payment industry

Digital payment providers must follow some compliance rules laid out by state/federal authorities. For example, a fintech company must collect information about its customers before allowing them to make digital payments. KYC (Know Your Customer) step is compulsory for all digital payment providers and banks. Besides the KYC step, many other compliance rules are made for digital payment providers. With the help of AI-led solutions, payment providers can complete cumbersome tasks associated with compliance. For example, a fintech platform powered by AI can automatically ask the customer to provide KYC details after signing up. By doing so, payment providers can save time for their employees and allow them to focus on core competencies. As more and more digital transformation services and solutions are discovered, companies will free their employees from mundane tasks like compliance, monitoring, customer support, and marketing.

Ensuring financial health with AI

A few years back, customers had to reach out to bank representatives for any advice. With the advancements in AIOps tools and technologies, digital payment providers are offering AI assistants to each customer. AI assistants offer a personalized banking experience and help customers to maintain financial health. For example, an AI assistant can tell you how to boost savings or clear your student loan before your tenure. Based on intelligent data analysis and predictive analytics models, AI assistants can provide financial health advice. Customer satisfaction is increasing drastically due to AI-powered assistants and advancements in AIOps solutions. Attract more customers by embedding an AI assistant into your digital payment solution!

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