Voice of the Industry

In the future, robots will rule the payments industry

Friday 15 June 2018 09:22 CET | Voice of the industry

Ralf Ohlhausen, Business Development Director at PPRO, shows how Machine Learning and Artificial Intelligence will impact the payments and financial industry.

The global volume of online payments will increase by almost 11% a year between 2015 and 2020, according to . In emerging Asian markets, payment volumes are expected to grow by as much as 30.9% [World Payments Report, Cap Gemini & BNP Paribas

In Europe, the passage of the liberalising second payments directive (PSD2) will allow fintechs to develop new payment products for bank customers, significantly increasing the volume of electronic payments within the EU. 

As payment volumes increase, payment service providers will no longer be able to rely extensively on manual processes. For everything from fraud detection to lead generation, the industry must turn to artificial intelligence. 

Let HAL help you win customers 

In an era of open banking, banks can no longer rely on a closed relationship with customers. They must react faster and place more emphasis on customer relationship management. Payment service providers, on the other hand, will need to move fast to establish themselves quickly or risk losing the battle for market share.

This competition is likely to extend beyond simply marketing payment services. The close relationship a TPP has with a consumer and the data that comes from this will make the TTP a highly valuable intermediary for advertisers in other sectors. This is particularly true, as advertising itself moves to an AI-driven and programmatic future. If regulation allows, this could be a profitable business extension for many TPPs. 

But to realise these benefits, the payments industry will need to be able to run propensity modelling at scale and in close to real time. This will only be possible with the wide-spread use of AI.  

AIs will become caring and even chatty

With the volume of transactions and the number of customers set to increase massively over the next few years, TPPs cannot afford to provide most of their customer care manually. It would cost too much to employ people to answer the expected volume of queries and, in any case, using people to answer routine questions is a waste of human capital.

Chatbots are already widely used in the financial industry to answer routine queries. Currently, the role chatbots can play in customer relationship management is limited. They can answer a relatively simple range of queries on a limited number of topics: “What is the balance on my account?”, “How much does this transaction cost?”. 

Natural Language Processing (NLP) is a branch of AI based on machine learning. It allows computers to process and accurately understand human speech, learning as they go. There’s a lot of buzz around NLP, because Google, Amazon and other tech giants constantly improve NLP to power their digital assistants. 

But NLP is also expected to power the next generation of customer services. As available processing power increases and bots can more intelligently and flexibly understand human language, the payments industry will shift to a bot-powered frontline in customer service. 

Robots will know you better than you know yourself

Another challenge which AI can help to solve, is finding the right balance between security and ease of use. Ideally, merchants and customers want a payment system to be as easy to use as possible. This keeps the barrier to purchase low and allows the widest possible customer base to use the system. 

Until now, the answer has been dual-factor authentication. Consumers are left going through the tedious process of swiping a fingerprint and entering a password or a unique key-phrase. Using AI, however, payment providers will be able to establish robust baselines of what is normal for each customer. 

When a transaction conforms to this baseline, it is low risk and can be allowed to proceed with lower standards of authentication. If the transaction stands out as an oddity, then more authentication is required.

Our future tending the machines

Within a short time the payments industry will be almost entirely AI driven. Intelligent systems will perform the onboarding and know-your-customer procedures, run payment backends, continuously scan millions of transactions for patterns that imply fraud but also future industry trends as well as sales and marketing opportunities. 

In this system, the role of humans will change. The industry will increasingly need the best AI developers and programmers and will need to compete with other industries to get them. This won’t come cheap. A recent New York Times report found that the best AI developers are now earning up to USD 1 million a year. 

There is no immediate threat for analysts and managers, but increasingly everybody will need to understand and be able to work with AIs. They’ll need to be able to take informed decisions about how to commission their developers to construct and weight AI models, understand and avoid data biases and take responsibility for the consequences their decisions have not just for the business, but for customers, and for society. 

About Ralf Ohlhausen

Ralf Ohlhausen, MSc in mathematics and Master of Telecommunications Business, has over 25 years’ experience in ecommerce, financial services, mobile telecommunications and IT. Before joining PPRO Group, he was President Europe at SafetyPay. Other management positions on his international career path took him to Digicel, O2, British Telecom and Mannesmann-Kienzle. At PPRO, Ralf is responsible for increasing PPRO’s global reach, focusing in particular on the addition of new payment choices to the company’s portfolio.

About PPRO Group

Cross-border e-payment specialist, PPRO Group, (PPRO) removes the complexity of international ecommerce payments by acquiring, collecting and processing an extensive range of alternative payments methods for Payment Service Providers (PSPs) under one contract, through one platform and one single integration. PPRO supports international payment methods across more than 100 countries, allowing PSPs to expand their merchants’ ecommerce reach, arrange hassle-free collection and achieve higher conversion rates.


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Keywords: AI payments, ML in payments, AI in finance, KYC, Natural Language Processing, PPRO
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Countries: World