The payments industry is increasingly taking advantage of new and emerging technology trends to help provide a more responsive and more useful service to customers.
The uptake of artificial intelligence (AI) is rapidly growing across many industries, as companies find new use cases for the technology – and nowhere more so than in payments. While AI has as many applications as definitions, artificial intelligence for payments is chiefly being put to work solving a range of data analysis challenges.
AI is also being used to gain a better understanding of customers: What they can afford to borrow? What are their needs? What behaviour is out of character for them.
This offers two benefits: First, it means the financial services industry can adapt its offerings to better serve its users. Secondly, it allows companies to automatically identify transactions that, for whatever reason, simply don't look right – enabling them to detect fraud as it happens.
And, thanks to the ability of AI algorithms to analyse and learn from vast datasets, artificial intelligence is increasingly being deployed to help prevent future fraudulent transactions, reducing costs and hassle for end users.
While many uses of AI are designed to shake up payments by improving back-end technologies, it is also bringing changes to how customers interact with their financial service providers at the front end. Chatbots, for example, are being deployed by banks and retailers to answer users' customer service questions, enabling them to query or facilitate payments.
Emerging technologies are being used more broadly to improve the user experience associated with payments, typically with a view to making payments more frictionless.
Take the role of social media, for example. While Facebook, Twitter et al have been around for a number of years, the ability to use them as payments tools is only just hitting the mainstream. Facebook, WhatsApp and others are working to transform what were once simple social messaging apps into new methods of transferring cash between users.
Voice assistant technology is also beginning to make its mark in financial services. Thanks to the rise of voice assistants such as Amazon's Alexa and Apple's Siri and their inclusion into both mobile handsets and home hub devices, banks are beginning to take notice.
Financial services companies like Capital One and Amex are exploring Alexa for transactional banking, while it's been estimated that one third of Americans will soon regularly make payments just with their voice.
Internet of Things (IoT) is another emerging technology bringing benefits to the payments space. Consumer and industrial objects connected to the internet are opening up new payments models.
Standard Chartered, for example, has created a system whereby payments are only triggered when an IoT-enabled shipment arrives at its destination. As IoT connectivity spreads, it's easy to imagine growing automation of payments as a result.
Near-field communication (NFC) is also attracting the attention of those with an interest in payments. The technology is fast becoming a standard feature even among low-end mobile handsets. NFC is spreading beyond the phone too – Visa is introducing NFC-enabled lapel pins for the Japan 2020 Olympics that will allow wearers to make payments.
Along with the push given to NFC payments by both tech companies like Apple and Google, as well as traditional financial services companies like Visa, cash payments could eventually become extinct. As take-up and familiarity with NFC grows, the ability to receive payments will expand beyond mobile devices and POS systems, potentially allowing any device to send or receive money.
Mobile and e-wallets are also becoming a force to be reckoned with. These applications hold payment details for various accounts centrally, allowing users to make transactions online, and are becoming popular in several key geographies, including China and Russia. E-wallets have the advantage of allowing businesses and consumers to send and accept payments across borders, even without a local bank account.
Digital payments technology also facilitates payments from e-wallets to be made to bank cards, extending their reach and ease of use.