As FinTechs embrace AI and implement new products, business owners can expect to see improved business-boosting processes. Chris Dahl comments on five ways AI will impact digital payments in 2024.
The digital payments landscape has seen many changes over the years due to advancements in technology, which have been harnessed by payments providers and financial institutions.
However, none have been as revolutionary as the introduction and widespread use of artificial intelligence.
Whilst AI has caused some uncertainty for business leaders who do not yet know how to capitalise on its potential, it has also expanded the realms of possibility for many due to its capacity to increase efficiencies and streamline operations.
As FinTechs embrace AI and implement new products this year, SMBs can hope to see improved processes which may help boost business. So, what’s in store for the year ahead?
Here are five ways digital payments could improve this year due to AI:
1. Increased personalisation
AI is set to significantly change the way payment providers tailor online experiences by leveraging insights into a merchant’s user behaviours. The possibilities include refining payment options, automating routine payment schedules, and integrating advanced AI-driven tools and support systems directly within payments platforms.
In practical terms, AI-integrated payment systems are capable of intelligently recommending transaction methods tailored to the user’s current location, the device being used, or their previous payment history. Likewise, the role of AI in customer service, through chatbots and virtual assistants, is also evolving to address more complex queries and provide specialised support.
2. Better fraud detection and prevention
As seen with some of the major data breaches in New Zealand in 2023, such as Latitude Financial’s major cyberattack, fraud has become a worsening problem for financial institutions. Cybercriminals use a number of tactics to hack and steal customer information from businesses, which can result in major financial losses and privacy breaches. Typical fraudulent activity can include account takeovers, hacking into customers’ accounts and conducting sales using stolen payment information.
While AI-powered fraud detection tools are already in use by many major companies, advancements in technology this year are set to strengthen security systems for financial institutions through anomaly detection, predictive analytics, behaviour analysis and real time risk assessments.
Likewise, it can also integrate with SIEM (Security Information and Event Management) systems to improve log analysis and incident response to facilitate faster identification of critical security events.
3. Voice activated payments
Whilst not widely available yet voice-activated payment systems are beginning to gain momentum, which enable users to make payments using voice commands. Whilst, at present, there are some limitations around the security of taking payments using this method, as AI continues to improve this will change. For example, Amazon’s Alexa and Google AI Assistants can already recognise natural language and process some payment requests in real-time, so as AI tech improves this will rise in popularity. The benefits of voice-activated payments include convenience and a hands-free way to make payments on the go.
4. AI powered biometric authentication
Biometric authentication, powered by AI, is already revolutionising identity verification. Tools like facial recognition and fingerprint scanning offer secure and convenient ways to confirm who we are. In 2024, as AI evolves, it will unlock the full potential of biometrics. The precision and accuracy of identity detection will continue to improve with AI, making it harder to impersonate someone online. This transformative technology holds immense promise for online payments and fraud prevention, potentially creating a near-impenetrable barrier against identity theft.
5. Predictive analytics for payment processing
Another improvement to payments powered by AI is predictive analytics, which will enable vast amounts of data to be analysed to provide high level payments trends, predict future payments behaviours and speed up processing time for payments. Likewise, many aspects surrounding payments such as risk profile assessments could become automated or handled by AI virtual assistants this year.
While the full extent of AI’s impact on the payments landscape is still unknown, 2024 is set to be another exciting year of transformational change in fintech for NZ businesses.