GenAI and Payments: No New Plumbing But Lots of Personalization
GenAI will personalize payment but not change the pipes.
This is a great report from Visa that shows how GenAI is going to impact the payment business by making payments easier and more personal than ever before.
That is fundamentally good and a fabulous use for GenAI.
I want to highlight what is not in Visa’s report: GenAI's impact on the financial plumbing behind the payment system.
This is important because payment systems, from account-to-account mobile payments to CBDC and stablecoins, are all changing quickly.
These new systems are adding new capabilities for our “financial plumbing” in that they carry payments like a pipe carries water.
What you don’t see in the list of upside opportunities for GenAI below is any modification to the plumbing.
👉TAKEAWAYS
Opportunities for GenAI in Payments
1. ACQUIRING MORE CUSTOMERS
🔹 Understanding the market and its hidden nuances
🔹 Developing winning products and propositions
2. DRIVING MORE ENGAGEMENT
🔹 Crafting compelling messaging and marketing
🔹 Providing a more personal and personalized service
🔹 Managing customer lifecycle
🔹 Enhancing loyalty
🔹 Enhancing customer retention
3. IMPROVING CUSTOMER EXPERIENCE
🔹 Increasing the speed and accuracy of manual tasks
🔹 Improving authorization
🔹 Enabling more granular operational decision-making, such as fraud
🔹 Delivering attentive, always on personalized service
👊STRAIGHT TALK👊
There is a common misconception that GenAI is going to make a significant changes to payments
The Visa report sheds light on the topic by showing that GenAI’s greatest contribution will be in the personalization of payments.
Using my earlier analogy that payment systems are like plumbing, GenAI will personalize your plumbing.
It will make the tap handles more beautiful or convenient and guarantee that your showers are at the perfect temperature.
These real advances add great value, and I do not dismiss them.
What GenAI can’t do is change how the water reaches your tap, and I think this is an important message.
For those who say “fraud detection,” these are systems bolted onto the pipes, not the pipes themselves Also, fraud detection is done by machine learning, not GenAI, for now.
Payments such as mobile cross-border transfers, stablecoins, CBDC, and others all use new pipes that will likely only benefit a little from GenAI.
GenAI will undoubtedly improve access to these new systems, but it can’t help much in building them.
Thoughts?
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