Artificial Intelligence Transforming the Digital Payments Landscape

The Boston Consulting Group report has projected that digital payments in India will reach $500 billion by 2020 and more than 50% of all internet users will be actively using digital payments. Another area that is slated to see just as rapid growth is Artificial Intelligence. In fact, Ray Kurzweil from Google has also predicted that AI will overtake human intelligence by 2019. So, is there a coming together of these two technology-driven trends that we can look forward to?

Sure enough, there are already signs that the payments industry in India is trying to make the most of technologies such as AI by utilizing them in providing innovative solutions. Let’s take a closer look at AI is increasingly making in-roads into payments.

Provide personalized digital payment experience
Payment providers are leveraging AI to offer personalized payment experience to consumers. By applying AI and analyzing past spends, payments systems can prompt the payment instrument, from the multiple the consumer possesses, which best suits the particular purchase at the time of checkout. For e.g. If a consumer frequently avails cashback, the system will prompt which of the consumer’s instrument is most suited to avail maximum cashback. Similarly, if the same consumer avails EMI option on a week of the month, then the best EMI option is made available to the consumer.Such personalized consumer experiences drive up spends and builds cohesive relationships.

Chatbots are emerging as favorites for personalized consumer engagement. Chatbots answer consumer queries and provide recommendations. Integrating payments in chatbots can further enhance the customer interaction. Chatbot of a leading private bank in the country allows consumers to pay for household bills, book and pay for movie tickets.

Voice assistants such as Amazon Alexa perform a slew of activities for consumers such as book cabs, provide weather forecast, place orders at e-commerce sites. Recent trends indicate that payments are getting integrated with voice assistants.

Assist with fraud detection and risk assessment
Fraud detection systems evaluate an enormous number of transactions along with millions of data points in real-time. With the constant review of consumer spends, it is possible to monitor activities and flag any aberrations in the pattern that may be reviewed further for corrective actions. AI provides better monitoring of the online payments and assists in responding in real-time to potential cases of fraud. Predictive analytics can also help to pinpoint the risks while upselling to individual customers or groups of customers.

Increased consumer engagement
Merchants in conjunction with digital payment companies can employ deep learning to identify new target customers by evaluating the digital footprints related to their recent purchases. Matching algorithms could find new services that the same customers may value. For e.g. a new parent buying diapers will value offers on baby products such as baby food, cribs etc.
AI-based systems can match payments with the customer’s historical data to predict their behavior. If the consumer’s account balance is below the incoming Direct Debit Mandate Amount, the AI engine can prompt the consumer to auto transfer funds from another linked account in-order to honor the mandate. This will allow them to pay their bills on time and avoid fines and penalties.

We are transforming from a data poor to a data-rich country. Digitization in India is preparing grounds for AI to consume digital data and become useful in multiple segments. The establishment of a national program for Artificial Intelligence as part of the 2018 Union Budget demonstrates the belief of the government in AI.

Jose Thattil, Co-Founder, and CEO of Phi Commerce says, “The areas where AI can make a significant impact include, improved customer experience, more accurate fraud detection, and better analytics. These areas are all so central to the digital payments value proposition that I can only see the role of AI in digital payments growing over the coming years.