When asked what the ‘next big disruptor’ within payments will be, over one-third of businesses surveyed by Western Union Business Solutions, in partnership with bobsguide, pointed to AI and machine learning. The latter is perhaps unsurprising when we consider that financial services companies will spend $11bn on AI in 2020, according to market intelligence provider IDC.
So, we’re mostly in agreement about AI’s potential to disrupt and transform. However, more practically, what do we think it will actually do for us? To ensure this disruptive technology is being developed in a way that satisfies the industry’s expectations, we need to be more specific in clarifying what we want AI to help us achieve. For example, should our focus lie in cost-efficiency, should we prioritise increasing security, or should we use AI to improve customer experience?
One way we’ve tried to decipher this at Western Union is by asking businesses across the globe what they consider to be vital commercial drivers. In the UK our data showed that nearly three quarters (72 percent) of companies see open banking and PSD2 as an opportunity for growth. This suggests that, as open banking continues to dominate industry discussions, automating compliance and using new technologies like AI to help customers benefit from the latest regulations is high on the priority list for a lot of financial services companies. Open banking allows businesses to benefit from rich and potentially complex new sources of data on their customers’ activities and financial position. Businesses that leverage AI and machine learning can potentially build reporting, recommendations, and advice engines for their customers that can drive customer acquisition, retention, and incremental revenue.
However, recognising the potential commercial benefit of open banking has little value unless companies have the resources – time, technology, money and expertise – to make the best use of it, whether in-house or through a third-party. Indeed, our survey results revealed that resource and expertise has become a sticking point for many industry players when trying to keep ahead of the regulatory game. Nearly one-third of businesses (30 percent) saw technical complexity as the biggest challenge to implementing new regulations, while sourcing talent was the third most commonly cited problem.
Yet for companies hungry to harness the latest technologies to make the best use of the changing regulatory environment, but without the resources immediately to hand, there is a solution: cross-industry collaboration. In fact, according to our research nearly two thirds (64 percent) of businesses consider innovative technology to be a key driver when selecting a third-party payments provider, suggesting that it’s this they need support with. Partnering with experts in a given domain allows companies to focus their internal resources on their improving their core competencies while still providing best-in-class capabilities to their end customers.
AI is going to continue to drive and disrupt financial services for the next few years and, in the current climate, regulation and security will feature heavily. While businesses are waking up to the impact this is having on their bottom lines and position in the market; there is still uncertainty about how to integrate and adapt their business models to stay ahead. In this environment, traditional companies are looking at third-party collaboration as a way to keep up.
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