Applications of AI in Digital Payments

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Applications of AI in Digital Payments

Banking & Blog

AI, or Artificial Intelligence, is a term that is becoming increasingly common in business talks and innovation circles. A growing number of leading experts are coming to realize the huge potential AI has in every single industry. The banking niche is no exception to the rule.

In the banking environment, AI innovation is all about discovering the need of the actual users (banks, fintech), uncovering the tech, and then revealing the innovation. AI innovation involves employing the proper technologies and tools that fit the industry’s expectations or a client’s needs in order to alleviate problems.

Today, AI brings a whole new level of automation, going beyond security & streamlining, to enable financial providers to easily monitor online payments and protect their users against cyber threats and money laundering. 

At Tremend, we are highly passionate about AI and have vast experience in AI & ML and financial software services, and we believe AI will play a crucial part in digital payments.

Without further ado, let’s take a closer look at some of the most impressive uses of AI in digital payments to better understand how AI is transforming this industry for the better.

1. Increased AI Power Automation 

AI will play a crucial role in digital payments. Artificial intelligence can be split into two: RPA automation and AI-powered banking bots.

Since robotic process automation (RPA) has gone mainstream and will continue to grow even more in the near future, banks and fintech are investing massively in their own RPA procedures and bots. These can be integrated across multiple platforms, such as desktops, smartphones, POS systems, or even within Amazon’s Alexa, enabling users to solve their payment issues quicker and perform common operations more easily.

For instance, users using Amazon Echo can use vocal chatbots to transfer money between accounts, change account details, view their bills, and schedule new payments. Similarly, people can perform these operations on their mobile apps or when accessing the bank interface on a desktop.

On the other hand, AI-powered bots are modern computer programs that can be used by banks to enhance the work performed by their agents in customer centers. A good example of a successful AI-powered bot comes from Singapore, where DBS’s bank virtual assistant enables customers to benefit from instant approval on a loan application, allowing them to easily manage their accounts and get their card-related issues resolved on the spot.

These modern bots, which are the future, will relieve pressure on the customer support team while providing 24/7 unobstructed support to the end customers. This will not only increase customer satisfaction but will also enable financial entities to save a great deal of time.

2. Personalized Banking Services 

Software programs can benefit from artificial intelligence, enabling the end customer to resolve their problems in a quick, seamless way. By utilizing machine learning,  these programs can observe the actions and activities performed by humans and then make personalized recommendations to them.

More specifically, in the banking industry, bots can recommend specific services to customers, such as digital self-registration & onboarding, credit score checks, remote account opening (savings and credit), loan application, p2p payments, feature-rich card management, digital insurance, and notification services enablement.

3. Improve the Users’ Financial Health

Another exciting application of AI in digital payments involves creating AI-based virtual assistants whose aim is to help consumers regain their financial health. One of these bots already exists and comes from Australia. Douugh, a smart bank, created Sophie, their first AI-based virtual assistant that can assist consumers in the process of reducing their student loan and credit card debts.

This smart bot can also offer consumers precious insights on how to make better spending decisions, based on their spending history and spending preferences. Sophie can also run diagnostics on the financial positions of the bank’s customers and enable them to better handle payment-related tasks such as bill payments.

Sophie is designed to analyze consumer behavior and make smart predictions, leveraging AI & ML. In the fintech sector, the robot continually analyzes the data regarding each customer’s spending pattern, along with savings habits. Ultimately, it allows end users to maintain a proper balance between their deposits and loans while improving their financial health.

In the coming years, these bots could become a goldmine for banks and fintech, allowing them to provide 360-degree financial solutions to their clients.

4. Benefits Offered by AI-Powered Decision-Making Tools, such as ChatGPT and Large Language Models

Large language models, such as the GPT-3, have become increasingly useful in the field of digital payments. These models are capable of processing vast amounts of data, making them a valuable tool for companies that require quick and accurate analysis of financial transactions.

One of the primary ways in which large language models are used in digital payments is through fraud detection. Payment providers and financial institutions use these models to analyze transaction data and identify patterns or anomalies that may indicate fraudulent activity. This is accomplished by training the model on a large dataset of known fraud cases, allowing it to learn the patterns and characteristics of fraudulent transactions. When new transactions are processed, the model can quickly analyze them to determine whether they are likely fraudulent.

Large language models can also be used to optimize payment processes. By analyzing transaction data and identifying patterns, these models can help companies optimize their payment processes to reduce errors and increase efficiency. For example, a model might identify a specific type of transaction that is frequently subject to chargebacks or errors, allowing the company to implement new processes or procedures to reduce these issues.

Finally, large language models can be used to improve financial forecasting and analysis. By processing large amounts of transaction data, these models can identify trends and patterns that may be difficult for humans to spot. This information can be used to make more accurate predictions about future financial performance, allowing companies to make more informed decisions about investments and other financial activities.

Instead of a Conclusion

In a nutshell, AI can revolutionize the digital payments sector and could prove to be a game-changer for clients in the years to come. As the technology continues to evolve, we’re probably going to see an increased desire from banks and fintech to invest in smart, AI-powered bots. Tremend is here to help any company looking to bring innovation into their AI & ML departments.