For years, the financial industry has been collecting big data but has been waiting for ways to utilize it to its full capability. Thanks to AI’s ability to process big data and deliver insights, that time is now. With a smartphone sitting in the pocket of nearly every consumer, FinTech is employing AI and machine learning to make mobile payments more secure as well as finally meeting consumer expectations for frictionless payment experiences.
Personalization in Banking and Mobile Payments
AI and machine learning have already popped up in FinTech in a few obvious places for initial adoption. Chatbots help reduce wait times for banking customer support and are starting to develop more personalized experiences, offering products based on individuals’ likelihood to require or desire them. Speaking of personalized experiences, predictive analytics can mine consumer behaviour data to provide a unique shopping experience with the goal of both satisfying the consumer by predicting their needs, but also increasing profits.
Removing Friction in Mobile Payment
For mobile payments, this shopping experience is key. Annoying false declines can be reduced by, again, collecting, processing, and analyzing big data through AI. The more data points related to consumer behaviour, the smarter mobile payments can become as AI is able to see patterns and, as a result, identify truly suspicious behaviour. This accuracy will soon allow for fewer barriers to a payment and less false declines, resulting in successful transactions and satisfied customers.
Because we’re used to so many security barriers before making a mobile payment, it will probably feel too easy at first, but AI and machine learning are simply more accurate in detecting fraud and we’ll see the numbers reflect this. AI’s ability to make these transactions secure might push some of the mobile payment stragglers over the finish line.
Mobile Payment AI Integration for Streamlining UX
The way that AI can streamline mobile payments is already showing up as payment bots start to integrate into existing platforms like Siri, Facebook Messenger, and Slack. Consumers can make payments without even having to stop what they’re doing and leave the platform. Not having to stop what you’re doing goes to the next level with voice command purchases. The technology that allows you to speak into a device and make a purchase is one thing, but AI and machine learning enable that transaction to become both accurate and secure. We continue to see this streamlining with real-time payments, something that traditional banks will need to adopt to keep up.
Can established businesses keep up with FinTech startups?
Keeping up is a big topic when we’re looking at AI and machine learning in FinTech and especially with mobile payments. New organizations are able to launch with the newest technology while established organizations are forced to change their legacy systems. Established companies can be poised to do this by setting up an agile infrastructure that will allow for innovation and the adoption of new technology. If this infrastructure isn’t in place, organizations will fall behind.
Established organizations can also benefit from building partnerships with startups in FinTech. Traditional financial institutions bring their experience and size, while FinTech startups bring innovation and new technology. The match has proven to be win-win for many organizations already. For example, we’re seeing banking brought to rural areas without access to traditional banks through Building Blocks and personal finance made way easier (and fee free) thanks to Simple.
Although innovation with AI and machine learning is exciting, FinTech always has some additional challenges. Finance is highly regulated, so anything new is usually met with resistance because of regulations like the Payment Services Directive and General Data Protection Regulation. This legal framework the financial industry has to operate within can make it difficult for innovation, but not impossible.
As AI and machine learning’s ability to detect fraud and remove friction in mobile payment is proven over time, organizations will be expected to provide this level of service to their customers. The very best way to prepare for this future, as well as any other new FinTech, is with an agile IT infrastructure. With the right infrastructure in place, organizations are able to evaluate and adopt new technologies successfully.