Overnight it seems like everyone is talking about artificial intelligence (AI). This is in large part to the release of ChatGPT, the natural language processing tool driven by AI-technology. ChatGPT's ability to have human-like conversations has been featured on everything from news channels to social media.
But AI has existed long before ChatGPT, first appearing in banking in the mid 1980s. Today, it is being used across multiple sectors and can be found in things like voice assist on mobile phones, digital assistants, robots for the house and TV subscription services like Amazon and Netflix. Increasingly, AI is being used in the finance sector and is helping to address the major pain points in the cross-border payments process.
But what exactly is AI, and what are the main benefits when it comes to making international payments?
What is AI?
Artificial intelligence refers to the capability of a machine to perform tasks by replicating human intelligence, such as decision-making, speech recognition and visual perception.
For financial institutions settling cross-border transactions it can be very difficult to navigate the various jurisdictional requirements whilst ensuring that their customers' funds are protected against fraud and settled without delay. In the payments space, AI is helping to automate data and processing checks to deliver better outcomes for institutions and customers alike.
Benefits of AI in cross-border payments
1. Faster Transactions
One of the biggest problems with cross-border payments is the amount of time it takes for your money to get from A to B. This is because banks still use legacy payments infrastructure, which relies on multiple correspondent banks to push money along. Each intermediary has its own checks that it needs to run before payment can be advanced, making for an incredibly inefficient and manual process.
AI is accelerating the resolution time of transactions by automating these data checks and processes, removing the need for manual intervention.
2. Improved Security
AI is already starting to play an important role in improving the security of cross-border transactions. As demand for global payments grows, so too does the risk of asset or information theft. AI's ability to promptly identify suspicious activity or irregular patterns across an entire payments network will reduce the likelihood of fraudulent activity thanks to early detection. AI can also assist payments providers with implementing safeguards to neutralise and deter the threat from fraudsters to keep their customers' funds and sensitive data protected.
AI's positive impact extends to compliance-related functions like Anti-Money-Laundering (AML) screening process. AI functionalities are being developed that can verify transactions automatically, reducing the possibility of human error while also speeding up transaction processing times.
3. Better Customer Experience
A lot of banks have already started using AI to improve customer experience by offering them more personalised services. For example, if you want to send money overseas using your bank’s website, you might be asked about your nationality or the purpose for which you want to send money abroad. This is because AI can analyse your past behaviour and provide results based on previous transactions or other information stored in your bank account such as credit scores and payment history. This helps banks offer better services by making sure that their customers get exactly what they want without having to wait in long queues or talk to someone over the phone or email.
With the help of AI, cross-border payments can be made more easily, efficiently and securely. This technology also allows for better communication between banks, which will help them process transactions faster and with fewer errors.
As global businesses expand, so too does the volume of cross-border payments. According to recent reports from Visa and McKinsey $120 trillion in B2B cross-border payments is processed annually, and is expected to grow. AI's role in smoothing and improving the cross-border payments process is now critical.