The Future of AI in the Payments Landscape: Expert Insights

Phase 5

February 27, 2024

In partnership with NYPAY, Phase 5 conducted a short online survey in December 2023 with 93 leading financial, payments, and consulting professionals in the US to get their views on the future of Artificial Intelligence (AI) in the payments landscape over the next two years.  This post delves into the anticipated impact of AI on payments, identifying both the opportunities and challenges ahead. 

Survey Insights 

Anticipated Transformations.

  • Only 1 in 3 anticipate a significant AI-driven transformation in payment processing over the next two years, while over half expect a moderate or even low impact.  

         

Impact of AI on Payment Next 2 Years by Phase 5 Research December 2023 

Current Infrastructure Readiness.

  • Few believe that current payment infrastructures in businesses are well equipped for AI integration.  

               

Business Preparedness to Integrate AI by Phase 5 Research December 2023 

Adoption Barriers.

  • Concerns around data privacy and security, regulatory and compliance issues, lack of AI talent/skills, the complexity of integration with existing payment infrastructures and reliability of AI models are the top 5 perceived barriers to AI adoption into business processing. 

               

Barriers to Adopting AI in Payments by Phase 5 Research December 2023 

AI Applications.

  • Payment fraud detection is clearly viewed as the highest opportunity area for AI applications over the next two years, followed by invoice and billing automation, while cross-border and peer-to-peer (P2P) payments are perceived as having lower potential in the immediate future. 

        

Biggest Opportunities for AI in Payments by Phase 5 Research December 2023 

Takeaways: 

  • Findings suggest a nuanced perspective among professionals regarding the anticipated pace of AI-driven transformations within the payments industry in the short term. The unpreparedness of businesses, notably driven by technological and regulatory limitations, underscores the complexity of integrating AI into payment systems. Addressing these challenges and expediting the effective use of AI technology to enhance business payment systems will require a collaborative effort between industry stakeholders, policymakers, and businesses.  
  • Findings also clearly highlight opportunities and priorities for AI applications in the current payment landscape. Payment fraud detection emerges at the top of the list, aligning with the industry’s growing concerns over cybersecurity and the need for advanced tools to combat fraudulent activities. Additionally, invoice and billing automation is considered a secondary opportunity, reflecting organizational demand for increased efficiency and streamlined financial operations as part of broader digital transformations.  

In contrast, cross-border and peer-to-peer (P2P) payments are seen as a lower priority in the near term. The complex nature of these transactions, including diversity of platforms, currency conversions, and jurisdictional variances, suggests that more refined strategies may be needed for seamless AI integration, potentially requiring a longer timeline. 

As the payments industry shifts toward a more digital future, collaboration and strategic thinking become crucial. Addressing key challenges and aligning priorities will lay the foundation for successful AI transformations in business payments.   

For more information about this or other financial services studies or to discuss how Phase 5 can support your specific organization’s journey toward customer-centricity, contact Phase 5 here.

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