The Payments Association has released its latest report, Using AI Intelligently: Smart ways to use Artificial Intelligence in Payments, showing how artificial intelligence (AI) and machine learning (ML) are being used in the payments, finance and banking sectors and how they may be used in the future.
The report shows most financial services organisations with over 5,000 employees are using some form of AI. These technologies allow companies to scale processes faster than human beings, process data far more efficiently than current decision-making programs and, most importantly, can find patterns and make inferences.
At a time when financial technology (FinTech) companies are working to make their products more personal while also making them efficient and seamless – as 92% of consumers expect a fast, frictionless experience while also getting one that is as trustworthy and secure as possible – AI offers a way to combine the best elements of human operators and traditional digital automation.
The efficiency savings are potentially astronomical, but more important is the ability of AI to improve itself in real time by analysing results and spotting patterns. Use cases for AI range from giving more accurate credit scores to document processing and anti-fraud applications.
The research shows how interest and uptake in AI was slow but steady pre-COVID, but following the pandemic interest increased dramatically as financial organisations sought ways to become more efficient. This in turn caused a rise in regulatory interest in AI to mitigate risks relating to privacy, unlawful discrimination, and security. Venture capital has also flowed into the industry, with AI-orientated start-ups in the finance and insurance industry being the seventh largest sector for investors.
Tony Craddock, Director General at The Payments Association, comments: “We knew that AI was transforming the payments industry, but from talking to figures within the industry about their own experience with AI we have seen that they are moving from using AI in distinct siloed processes to having it be a core technology driving their business. By giving AI technology ‘oversight’ over different processes companies are creating datasets that allow AI to make predictions and improve processes.”
He adds: “We have also seen how important AI is from a financial inclusion perspective: less advanced decision-tree based systems could only work with limited amounts of data when doing things like approving a new customer for a loan, but AI systems can see a holistic picture of who a person is and make a much more nuanced decision, which will open up financial options to people who would otherwise have been excluded. Much of this is enabled by Open Banking, which explains why so many innovations in payments are interdependent.”
Naushad Contractor, Chief Executive and Founder of Fable Fintech, says: “The financial services industry is going through a period of profound change and disruption. Technology is providing the means for firms to reimagine the way in which they operate and interact with their customers, suppliers and employees. One significant area of development is the effective utilisation of artificial intelligence (AI). AI is fashion but it’s at an early stage and we are not really seeing it applied across the board on a consistent basis in a way that we all recognise and understand. AI is big Data, Big Processes but when AI starts to predict rather than just correlate, then we will see the true value of what it brings.”
The whitepaper stresses that we are only starting to see the transformative impact of AI on the finance sector. One estimate puts the potential value of AI in finance at $1 trillion annually, but this could be the tip of the iceberg when it is considered how much AI will improve in the future.
You can read the full report here.