Artificial Intelligence and payments: how technology is going to revolutionize the sector

Published on Nov 28 2023.

7 minutes reading

There is no question that Artificial Intelligence (AI) is one of the lead topics in the business world these days. The possibility of reducing costs and expanding productivity by automating processes has made the implementation of this technology a priority for many companies in Brazil and worldwide. In the payments sector, these benefits promise to revolutionize the lives of millions of consumers.

A study conducted by consulting firm Bain & Company in June 2023, confirmed this global business trend in relation to AI. Of the companies interviewed, 85% said they intend to implement the technology in their businesses within the next two to four years.

Its true potential, according to the companies interviewed, is guaranteeing process efficiency and reducing costs. However, to get maximum advantage out of AI, the use of data is necessary. Therefore, organizations need to invest in information processing and storage infrastructure.

In this scenario, the banking and payments sector stands out as one of the areas that will benefit the most from Artificial Intelligence. The large volume of data generated by these institutions, together with heavy investments in technology, make this the ideal environment for creating AI-driven applications.

In addition, there are numerous areas where AI can be used, and the effects are fundamental for accelerating financial inclusion in countries with still-low rates of bankarization, such as those in Latin America.

Artificial Intelligence and payments: what will we see in the near future?

During the LAC Innovation Forum 2023, an annual event held by Mastercard, leaders in the payments sector and digital financial agents attended several panels on the main current debates in the industry.

During the event, the main topic was of course the use of data and Artificial Intelligence systems for a series of different applications in payments and banking.

“We definitely have a lot to talk about in terms of Artificial Intelligence in payments and banking. This was the topic that permeated nearly every discussion at the Mastercard LAC Innovation Forum, resulting in great discussions about current usage cases and what we can expect for the future of the sector,” said Anderson Olivares, Dock’s General Manager - Latam, who participated in the event.

João Marcos Oliveira, Dock’s Business Development Director, who was also at the conference, said that the LAC Innovation Forum was a unique opportunity to hear excellent conversations about the trends that are molding the payments sector. “It was an agenda replete with content on Artificial Intelligence, Wallets, and the power of data, with numerous insights for us all,” he said.

Artificial Intelligence and applications in the banking and payments sector

For both executives, the use of data and the development of AI applications are imminent in the sector, and are expected to add value for consumersOne example discussed during the event, and mentioned by Anderson and João, is the use of models that read a client’s expenditures profile, understand their needs, and make recommendations for financial education content.

In addition to understanding a consumer’s expenditure profile and making recommendations, Artificial Intelligence may also be integrated in other ways, such as discovering new consumption patterns, making personalized offers, automating processes, and promoting greater security in financial transactions..

Discovering new habits

Artificial Intelligence in payments can also be a major ally in the task of navigating the enormous volume of data generated by clients, and identifying new consumption patterns. By discovering these habits, companies can take the wheel and create new financial products that meet mapped needs.

Personalized offers and security

Just as AI can understand consumer consumption patterns and recommend financial education content, this same data analysis model, within the role of an institution’s products and financial services , can be used to identify which ones are most adequate for a given consumer’s financial reality.

Additionally, creating a consumption profile, which evaluates all of a client’s income and expenditures, is fundamental for detecting and prevent fraud. Using predictive Artificial Intelligence models, banks, fintech , and other companies in the sector can accurately calculate if a purchase is part of the consumer’s profile, and if it is not, to block payment attempts.

Process automation

In the day-to-day of a banking and payments sector player, many activities can be automated. According to a study by Juniper Research, banks can save up to US$ 900 million by 2028 by using Artificial Intelligence to reduce operating costs, shortening the time spent on checking documents when an account is opened.

AI can also be an important ally in automating other processes, such as analyzing credit profiles. That can be done by reading the financial information available on that client, and using weights to decide what amount can be extended.

Artificial Intelligence in payments can also be used in customer service, using robots to answer more general questions about products and services, for example.

Artificial Intelligence and payments: what you saw in this article

The payments sector is one that will benefit the most from implementing Artificial Intelligence, principally due to the high volume of information created by clients, and also by the size of the investments made by these companies in technology.
Use of AI is already cited by many institutions as one of the main trends for the payments sector in the coming years, as seen at the Mastercard LAC Innovation Forum.
Artificial Intelligence in payments may be used to analyze large quantities of data, and to identify consumption patterns. This type of information is important for developing new products and services.
AI may be used to create a client consumption profile, which evaluates all funds coming into or going out of bank accounts. With this information, financial education content can be recommended, products or services offered, and fraud detected.
Process automation, such as checking documents to open an account, analyzing a credit profile, and customer services, are also possible through implementation of AI, and can save businesses a great deal of money.