The spread of Alexa, Siri, Google Assistant and Samsung's Bixby is changing the way consumers interact with technology. Behind the scenes, artificial intelligence is doing more than ever to handle and protect payments.
A new path for autonomous car tech
Neural network systems — which try to emulate the human brain — will become increasingly important as the stolen identities from the recent Equifax breach and others start surfacing in the coming years on fraudulent payment card or loan applications.
"It's a technology that comes out of the computer vision or self-driving car space, and it is very good at picking up the very small nuances most often associated with images," said Ken Meiser, vice president of identity solutions at ID Analytics, the San Diego-based consumer risk management firm.
ID Analytics has launched ID Score 9.5, the latest version of its fraud scoring system for new account applications. The upgrade brings convolutional neural network technology to the forefront as a way to visualize data to pick up on the subtlest differences and previously confirmed red flags in a bogus application. It can go as deep as providing business or bank clients with "signals" on whether the fraud attempt is coming from a first- or third-party source.
The neural technology essentially creates a model that presents data in a 3D representation, Meiser said. "It has the regular set of behaviors, what the person looks like, the address, phone number, a transaction history and then it examines the application to see if anything is different."
AI in the wrong hands
Criminals increasingly are turning to machine learning and bots to commit online fraud, which poses a special challenge in industries selling high-ticket goods, such as the travel industry.
The Canadian travel agency RedTag.ca sees a surge of all types of fraud attempts during the holiday season when travel volume surges, said Roberto Gennaro, chief digital officer at RedTag.ca.
“Fraud attempts escalate right before the holidays for flights within a few days of the bookings, with fraudsters using stolen cards from travelers,” Gennaro said.
One of the insidious side effects of criminals deploying bots is that they often fraudulently reserve blocks of seats on flights, causing the price of the remaining unsold seats to increase dramatically, throwing off sales, he said.
“Threats from bots are always changing, and as they get better at mimicking human behavior while browsing our travel sites, they make it look like they’re legitimately shopping by adding items to their cart and proceeding to a checkout page,” Gennaro said.
RedTag.ca has been able to thwart many bot attacks this year with help from Distil Networks, which weeds out bad bots from humans before the checkout process begins, he said.
Amazon's vision for AI
In yet another hint of Amazon’s encroachment into every single aspect of our digital existence, the company is reported to be working on a messaging platform called Anytime. This would put Amazon in league with Facebook, Alipay, Venmo and other companies that are betting on the fusion of payments and social media.
While this latest development could be dismissed as Amazon being Amazon — after all, the company has had its share offlops in payments — there are macro trends occurring that are attracting many tech-savvy companies to the post-app retail environment.
While the term “conversational commerce” is relatively new to the fintech lexicon, it has been around for a couple of years.
In a 2015 blog post by Chris Messina (inventor of the hashtag), he describes his vision of conversational commerce as “utilizing chat, messaging, or other natural language interfaces (i.e. voice) to interact with people, brands, or services and bots that heretofore have had no real place in the bidirectional, asynchronous messaging context."
Messina anticipates that this will evolve to a point in the near future where “the user can’t detect the difference, and will interact with either human agent or computer bot in roughly the same interaction paradigm.”
Putting AI into debit cards
The fintech startup Douugh, which has built an artificial intelligence engine designed to help consumers regain financial health, and Choice Financial, a community bank based in Fargo, N.D., are teaming up to create a new digital bank account and debit card.
The two firms will jointly launch a checking account and debit card with Douugh’s branding and AI-based virtual assistant, which is called Sophie. Choice has also invested in Douugh to support the startup’s expansion, which has raised $2.5 million to date.
Douugh, which went live in August, uses artificial intelligence to help consumers reduce their student loan and credit card debt and make better spending and savings decisions. It does not have a bank charter and needs the backing of one to offer deposit products.
“We’re trying to build a smart bank account,” said Andy Taylor, the founder and CEO of Douugh, which is based in San Francisco. “The ability to tack on deposits and issue a debit card is crucial to that.”
Sophie will “run diagnostics” on customers financial positions and be able to do things like make payments, pay bills, automatically save, and track and manage spending and savings goals.
Facebook's platform for AI innovation
Companies like American Express have deployed AI bots on Facebook's Messenger to handle customer service and payments.
Amex’s chatbot debuted at the 2016 Cannes Lion International Festival of Creativity, featuring transaction notifications and benefit reminders. Every time a purchase is made, the chatbot sends a notification outlining the transaction.
Version two of the chatbot allows users to add a card when linking an Amex account to Facebook Messenger.
Payment card credentials are then stored with Facebook so users can transact on the social network to pay Facebook directly for digital games or goods, buy items from Facebook's Marketplace or advertisers, or donate to charity.
Banker or bot?
DBS, Singapore's largest bank, uses "conversational AI" to manage customer accounts and initiate payments.
“Our customers often do not realize that they are talking to a bot and not a person as the interactions are so natural,” said Sandeep Lal, group head of digital bank at DBS.
The bot, called Kai, can do more for a customer than a live agent in a customer care center can, according to Lal.
“If you ask an agent, ‘How much did I spend on groceries last month?’ they might take some time to pull up that data,” he said. Kai can answer instantly. The virtual assistant could also handle complicated service questions faster and more accurately than a human, he said.
The store comes alive
Computers and AI are now being built into the walls and ceilings of retail stores.
Perhaps the most extreme example is Moby, which deployed a self-driving supermarket in Shanghai.
The futuristic-themed, solar-powered store is "staffed" by a holographic greeter and recognizes customers via a mobile app, according to Popular Mechanics. The concept was developed by Sweden-based Wheelys and China-based Hefei University and Himalayafy.
Though the concept is being tested in Shanghai, the ultimate purpose of the Moby store is to maintain a retail presence in regions that don't have a strong enough economy to support a permanent grocery store, according to the article. And in its current form, the "self-driving" store still needs a human driver to return it to a warehouse.
A more stationary model might be Amazon Go, a concept store that doesn't have holographic greeters but does have sensors throughout the store that can detect what people are picking up and which accounts to charge for the payment.
The pandemic and subsequent economic crisis have raised the stakes, since the government’s role in recovery and how stimulus is delivered — and policies impacting the goals of card and technology companies — will be largely determined by the philosophy of leadership.
The Trump administration has barred the use of TikTok and WeChat inside the U.S., including a direct ban on WeChat Pay, setting up potential retaliation against U.S. companies that could interrupt international payment flows.