1. AI Enhances Fraud Detection and Prevention
Fraud detection is a pivotal component of secure payment systems, and AI can mitigate fraudulent transactions with unprecedented speed and precision.
“Last year, we harnessed AI to protect over 125 billion payment transactions for our diverse user base,” says Sandeep Malhotra, Mastercard’s executive vice president for products and innovation in the Asia-Pacific region. The ability to process and monitor such vast amounts of data on a global scale simply wouldn’t be possible without AI.”
A Discover company blog says these recent practices are helping to secure financial transactions:
- Analyze data in real time and identify changes in fraud techniques to minimize the risk of false declines of transactions.
- Continuously identify and defend against threats that could be hidden in transactions.
- Boost know-your-customer frameworks by quickly combing through data to detect and flag suspicious transactions.
- Collect data on customer purchasing habits to identify “friendly” fraud (when a person disputes a legitimate charge).
Salesforce also launched an AI-powered solution in 2024 to help banks settle financial transaction disputes more efficiently, including generative-AI based customer communication and simplified workflows with merchants.
“These new capabilities simplify and streamline the entire transaction dispute cycle, enabling banks to deliver exceptional customer experiences and drive innovation across their business,” says Eran Agrios, general manager and senior vice president of financial services at Salesforce.
AI also can help cut down on false positives, which Kevin Levitt, NVIDIA’s global business lead for financial services, describes as a “headache for consumers” because they “shut down legitimate transactions.” These advanced models are protecting institutions from financial and reputational losses, he explains.
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2. AI Simplifies Everyday Transactions
AI is also helping banks streamline everyday transactions, making processes faster, cheaper and more accurate.
“AI tools can automate accounting and compliance processes that are repetitive in nature, such as categorizing transactions, correlating data from invoices and receipts, and reconciling accounts,” the Discover blog notes.
AI also automates payment rails, the complex system of handling transactions. Financial Services Review explains: “By analyzing historical data and current network conditions, AI systems can make intelligent decisions about the best paths for processing transactions … It speeds up transaction times and reduces the likelihood of human error.”
DIG DEEPER: Learn about five tech essentials to boost efficiency in financial organizations.
Experts at J.P.Morgan say embedded finance is the direction AI-powered transactions are headed next, as it creates value for businesses and consumers. It “seamlessly integrates financial offerings such as digital interfaces, digital wallets, and loyalty apps into a much broader variety of everyday activities and services.”
However, embedded finance would require much faster speeds (since real-time systems still take several seconds to process), says Cyrus Bhathawalla, chief administrative officer of payments for J.P.Morgan’s Asia-Pacific region. “We want payments to work seamlessly in the background to support these interactions.”
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