Issue 01 - 2023MAGAZINETechnology
GBO_Artificial Intelligence

AI dominates cross-border payments territory

Abdul Naushad asserts that fintech companies risk falling behind their competitors if they don't embrace Artificial Intelligence and integrate it into every aspect of their operating plan

Artificial Intelligence (AI) is playing a critical role in enhancing the effectiveness and security of cross-border international payments, according to Buckzy Payments Inc.

Artificial Intelligence’s reputation as a science-fiction technology that could only be used in movies and comic books has given way to its practical application in a wide range of routine commercial operations in the finance sector. This also applies to international payments, where Artificial Intelligence is already automating procedures to speed up transactions, boost security, and enhance customer service quality.

In January 2022, Abdul Naushad, President and CEO of Buckzy Payments, made the first remarks on Artificial Intelligence’s capabilities in the payments industry when he discussed its value in minimising human errors and quickly computing credit scores for consumers. But since then, AI has advanced quickly, and decision-makers in the payments industry are now looking into how the solution may assist them to address other payment-related problems.

With over 35% of firms reporting its use in 2022, a four-point rise from 2021, recent research from IBM demonstrates that Artificial Intelligence adoption is increasing globally and across all industries. Around 37% of financial services organisations intend to employ Artificial Intelligence to achieve a competitive advantage, according to another Nvidia survey.

Abdul Naushad asserts that fintech companies risk falling behind their competitors if they don’t embrace Artificial Intelligence and integrate it into every aspect of their operating plan.

During an interaction with Global Banking and Finance, he said, “We already see fintech implementing Artificial Intelligence-based solutions for a range of functions – many are installing Artificial Intelligence-powered chatbots on their websites or apps to offer instant, personalised responses to customer queries. But customer expectations are constantly evolving, and efficiency and quality of service are at the top of the list of their demands. Expect, therefore, to see the next fintech leverage Artificial Intelligence-based smart speaker technology to enable users to complete transactions verbally on any device, without first needing to dial a number.”

There is a claim that a computer or robot is only as intelligent as the person who programmed it. However, Artificial Intelligence merely refers to the fact that machines have intelligence that is activated by artificial action rather than human action, which causes the machine to react in a particular way. In other words, a machine can mimic what we do naturally.

We require AI to find solutions to issues and enable fintech to simplify cross-border payment services. They are better able to fine-tune their operations through intelligently created apps that cater to their primary target markets’ personal financial management.

Artificial Intelligence and machine learning are not only for big banks. Fintechs now have access to a whole new, bright world of opportunities thanks to Artificial Intelligence. The days of needing a huge budget and a sea of professionals to help create a smooth financial experience are long gone. Today’s smaller companies are challenging the major players for market share by coupling superior customer service with their products better clarity and security, all through Artificial Intelligence-powered solutions.

Fintech websites can incorporate Artificial Intelligence software that serves as customer support agents through pop-up chat boxes on your screen.

They may not deal with the most difficult problems, but they are frequently programmed to assist with straightforward tasks. Since the ‘bot’ is pre-programmed with answers to common queries, customer care is available around the clock. They can even indicate which questions will benefit from further human assistance.

A crucial application of Artificial Intelligence is determining a customer’s creditworthiness. Why? Banks and other financial institutions still need to turn a profit because they are companies. Therefore, knowing someone’s creditworthiness can help them determine the cost (the risk) more accurately. This is frequently done by looking at simple personal data.

Instead of relying on outside sources, a fintech may determine whether a customer is a risk or not from their own data. The good news is that everybody is treated fairly. When a fintech uses Artificial Intelligence, the cost is minimised, which results in a lower price for credit-worthy customers. If the risks are significant, a bank would be required to charge uniformly.

Additionally, Artificial Intelligence has the potential to significantly lower the danger of online fraud. Since it can detect fraudulent or suspect activities much faster than human intervention, customers and organisations can feel more secure about cybersecurity, particularly when it comes to financial transactions.

Fintech is currently keeping our financial transactions secure and our costs cheap. However, the field of Artificial Intelligence is always expanding, and with every passing year and our lives becoming more digital, Artificial Intelligence will be available to expedite every procedure. Only our financial institutions’ ability to keep up with it is the main obstacle.

If we are to shift our finances even more online, there can be no future for finance without Artificial Intelligence. All banks and fintech need to do is to provide their human workforce with the equipment they need to meet demand. Fintechs must stay up with the market as our financial lives become more complicated.

For global financial stability, continued expansion in international e-commerce, and notably for the eradication of poverty, cross-border payments are essential. Therefore, having a frictionless Artificial Intelligence-based solution for international payments is crucial.

To put that into perspective, consider the following: Firstly, the United Nations has set a target of reducing remittance charges to 3% by 2030. Secondly, the G20 has made improving cross-border payments a priority and asked the Financial Stability Board (FSB) to come up with solutions. Lastly, the Committee on Payments and Market Infrastructures (CPMI) has published a list of 19 “building blocks” to improve cross-border payments.

Meanwhile, the UAE’s investment in Artificial Intelligence across the last decade reached USD 2.5 billion and the UAE is the biggest regional investor in Artificial Intelligence in the region according to a report by Microsoft and Ernst and Young.

The Artificial Intelligence Maturity Report in the Middle East and Africa says that the bulk of the investments went toward social media and Internet of Things (IoT) projects. Another eight technologies also saw significant artificial intelligence investment in the UAE. These technologies included machine learning, smart mobility, and gamification.

According to the study, 18% of UAE businesses consider Artificial Intelligence as their main digital technology priority. The UAE’s achievement in applying Artificial Intelligence at scale is because of the fact that business leaders in the region understood its value proposition and prioritised Artificial Intelligence-based projects.

The Artificial Intelligence Maturity Report in the Middle East and Africa finds that 94% of the companies in the UAE report involvement in Artificial Intelligence at the executive management level which is the highest in the Middle East and Africa (MEA) region.

The report also finds that Artificial Intelligence leadership capability in the region is also high compared to other regions in MEA. According to the report, 46% of the leadership in UAE companies are reportedly competent or very competent in Artificial Intelligence as technology, while close to a quarter is highly competent.

AI is the way ahead and here are examples to prove it

There is no doubt in the fact that the recent spurt in fintech companies has given consumers new ways of managing their money. AI-powered chatbots deployed by these firms are taking care of customer queries that were unimaginable a decade back.

Now, traditional banking mechanism has taken note of these disruptive solutions and is now introducing their own measures, again guided by AI and robotics. This healthy competition is helping the financial sector as all these measures are cutting down costs, apart from being customer friendly.

Chatbots are converting frequently asked questions (FAQs) into simulated conversations, thereby adding a personal touch to customer conversations. If the customer forgets his/her password, these chatbots are there to help the person out. AI, guided by machine learning, is also helping these banks to process large volumes of data. Also, since the system is continuously evolving, it is identifying potential frauds as well, in terms of scanning suspicious transactions and providing a boost to processing sensitive financial documentation. And yes, all these things are happening with a reduced likelihood of security risk.

No wonder, the Middle East and Africa are seeing AI as an investment area to upgrade their fintech sector.

Portugal-based data science company Feedzai claims that their software called ‘OpenML Engine’ can help data scientists employed by banks, as the latter can build their own custom fraud detection models while using the fraud-specific assistance through the software. The company was founded in 2011 and got classified as a unicorn start-up after a Series D funding round pushed its value above $1 billion.

Feedzai is now known as the world’s first RiskOps platform for financial risk management and Quadrant Knowledge Solutions, in 2022, named the firm as a technology leader in its study called “SPARK Matrix: Behavioral Biometrics, 2022”.

Also, artificial intelligence is generating expenditure reports as well, which too far quicker than a normal human capacity. Even the risk factor is low here. AI can even power technologies to help human workers with tracking and automation processes, thus making the bank employees’ lives easier by simplifying and quickening cumbersome processes such as compliance, data entry, fraud and security, apart from making them able to watch, learn and verify anomalies in customer behaviour to track down frauds.

Talking about the fintech sector excelling in customer service, the credit again goes to AI and its products, namely chatbots, and virtual helpers. It is also helping these companies to save costs of developing front offices and helplines.

And this technology will grow as the partnership of deep learning algorithms and AI will continue refining things like understanding human language and formulating convincing responses, handling transactional calls and traditional helplines. This will reduce the manual management (human-guided) of these operations to a great extent.

United States-based Kasisto is a company working on a conversational AI Platform and it is offering services for consumer banking, business banking and insurance. It is providing products that can help customers to set financial goals, get spending alerts, break down spending patterns, figuring out due bills.

Kasisto’s AI services are also designed to refer the customer to a live agent if it cannot handle a query, ensuring that qualified human professionals are giving those customers much-needed financial inputs.

Also, how can we forget about AI’s ability to offer data analytics and key insights to these fintech companies, in terms of making quick decisions? Firms specialising in personal financial management give their customers crucial insights into the latters’ spending based on income and expenditure habits. This forms the core of new-age personalised financial management policies.

US-based Narrative Science has developed a software called Quill, which can reportedly help financial institutions generate narrative reports from data sets like sales records, using natural language generation that transforms data into plain-English stories.

Also, fintech companies are providing loan application methods without the need for credit reviews by banks. One such company is Affirm, which is utilising AI to mine data from potential borrowers, in order to create a glimpse into their creditworthiness, followed by a “soft” credit score. The firm is checking customer variables like geo-location, web search histories, job profiles and social media activities, a 360* different way of approaching than the traditional metrics of deciding a credit rating.

Personalisation is becoming more and more important in the fintech sector and businesses are now having the ability to deliver customer-centric banking experiences. The combination of AI, machine learning, analytics and human professionals is doing the wonders for these firms right now and will continue the same trajectory in future as well.

These AI-powered chatbots and virtual assistants have been utilized by traditional financial institutions like American Express and HSBC.

With labour costs rising on the offshore outsourcing front, robotics and AI will become a preferred method of saving costs, and this will reduce the risks of human errors as well.

In fact, Wall Street has fully embraced AI to help gauge market movements. There are technologies available that can evaluate companies with the help of variables like earnings calls and public press releases to analyse speech patterns, semantics, and word usage. This method is helping to eliminate human bias while analysing businesses. This AI-powered ecosystem is also assessing big data spanning decades, before making predictions on the future of the companies.

AI can also help businesses to learn and comply with corporate regulations. MindBridge is offering AI platforms which are helping companies to deal with these regulatory activities.

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