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The changing face of payments, security, and AI in finance

A Picture of Marco Arce
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November 20, 2019 | Topic: Financial  
The changing face of payments, security, and AI in finance

Money 20/20 – Belatrix’s key takeaways on payments, security and AI

A couple of weeks ago, Belatrix, now a Globant Division, sponsored one of the largest global financial services conferences, Money 20/20. Over 12,000 bankers and technology leaders from around the world attended. This year, the event saw many insights and innovative initiatives around lending, cybersecurity, payments, and emerging and converging technologies.
We witnessed many technologies and providers behind the latest tech trends around the future movement of money. Nevertheless, certain topics stood out:

  • The threat of big tech is coming fast
  • The criticality of cybersecurity on product strategy
  • Artificial intelligence becoming a true competitive differentiator

Let’s take a look at these three takeaways in more detail:

The BigTech incursion on payments

A few months ago, three big tech companies made inroads into finance: Apple launched their credit card; Amazon introduced small business loans for merchants; Facebook announced its ambitious global plan on cryptocurrency, Libra.

Now it was Uber‘s turn. They announced the launch of Uber Money, marking their debut into the financial services industry. Uber aims to house their efforts by creating a digital wallet and upgraded debit and credit cards. Uber, which has 4 million drivers and 100 million active riders around the world, will enable individuals to access a mobile bank account and other financial services.

Uber’s plans not only create a Wallet, they are betting on creating a financial ecosystem where they remove costs related to financial middlemen and generate new revenue streams. They will initially test a debit card product through an “instant pay” service in the US. Uber Wallet will allow drivers and riders to store money, track their transaction history and make electronic payments. In addition, this service will be integrated with Apple Pay and Google Pay, so drivers can immediately spend their earnings without a physical debit card.

Meanwhile, Amazon announced that they will allow its customers to pay utility bills online via Alexa. Amazon is aiming to reach 95% of the US market by the end of year. As of today, many banks have implemented different channels where they offer common bill payments online, web, mobile and voice assistants (including integrations with Alexa).

Nevertheless, more than 70% of customers don’t enroll in automatic payments with their current banks due a poor user experience. Amazon has seen a huge opportunity here – they plan to provide a great experience via voice interactions and intelligent assistants, allowing users to get notifications through Alexa when their bills are due and to ask questions about the bill amount or how it compares with prior ones.

The criticality of cybersecurity for financial solutions

One of the topics stressed among different panels and tracks was how digitalization strategies have left organizations more vulnerable to security breaches and how critical it is to have cybersecurity as a top priority when designing new digital solutions. Key aspects of like authentication and working towards a seamless, secure and ethical digital experience when designing solutions were frequently discussed during Money 20/20.

In the context of financial product development, adopting a shift left approach to security from the early stages is crucial to identify, prevent and mitigate fraud on time. This refers to integrating security best practices earlier in the ideation and development process, rather than testing security at the end, and having in mind the need to produce secure code from the beginning.

The huge demand for mobile apps and now open API exposure for banking and fintech has brought with it the rise of security breaches. According to a recent report, more than 83% of internet traffic is API only, which means application to application traffic. This is mainly due to new microservices architecture and the rise in open APIs.

Alisson Knights, a white-hat hacker, shared her recent findings about how systemic this problem is, and the vulnerability of today’s financial institutions. She downloaded 30 popular financial services mobile apps, she decompiled them quickly to access to the entire source code, and gathered the authentication of API tokens and keys. She did this to demonstrate how fragile they had been designed, especially when these apps have integration with third-party payment processors and other external services.

Hyper-personalization through artificial intelligence

A few years ago, financial companies started implementing AI mainly for fraud prevention, analytics, process automation and self-learning programs. However, due to the fast pace of digitalization, we are seeing more and more successful implementations focused on customer experience personalization, which is enabling businesses to obtain competitive advantage.

There is no doubt that AI is no longer a nice-to-have initiative. Rather it is a must-have if financial institutions want to continue to be relevant. Increasingly, fintechs and banks are powering new solutions centered on data-driven hyper-personalization to build great customer experiences.
Multiple business and technology leaders agreed that data is increasing exponentially which is accelerating the growth of digitally-enabled businesses and forcing them all to be constantly looking for new ways to obtain or process data using AI models.

New AI uses cases demonstrated at Money 20/20 reflect how business is changing. In the past, AI was mainly focused on reviewing and scanning loan documents, leveraging various data sources. Today, solutions allow organizations to improve experiences, reducing the need for consumer data entry, while also assessing and identifying the right financial product based on customer behavior data and needs. In the near future, financial institutions will be able to predict customer life events and provide better deals at the right time.

AI has a lot of potential usages and is already having a profound impact on payments and financial services delivery. The most immediate and powerful opportunity presented by AI is the ability to get closer to customers and deliver hyper-personalized experiences. For example, if a financial institution can intelligently deploy transaction data, they can leverage past and predicted behavior across numerous channels to understand customer life events. They can then apply this profile to deliver smart, unique recommendations, or push tailored offers and campaigns. Ultimately this will lead to a fundamentally different relationship between the customer and the financial institution.

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