Saravanan P. Selvam, CEO of Macro Global at the Seamless Europe 2023 event- Messe-Berlin, brought forth a wealth of expertise and forward-thinking strategies, offering a comprehensive outlook on the topic of “Forecasting the future of Generative AI in Cross-border payments”.
Here are glimpses of his speech at the event:
The Power of Generative AI in Cross-Border Payments
Equipped with the superior power to alter the payment landscape, Generative AI’s prowess can now handle transactional data, predict market fluctuations accurately, and even identify fraudulent activities. NLP (Natural Language Processing) and ML (Machine Learning) are two subsets of AI that work together to enhance performance continuously.
Advanced algorithms and predictive analytics allow Generative AI to learn and adapt from the questions posed and the quality of responses, and with each conversation cycle, the system optimises its performance, resulting in improved interactions. In the financial landscape, it helps many institutions to stay ahead of the competition, make informed decisions, curb fraudulent activities, enhance the global clientele, and open a plethora of possibilities to evolve futuristically.
It can streamline the cross-border payment ecosystem, and give a customised user experience with complete security, completely altering the way the cross-border payments are functioning. Generative AI is the future of secure cross-border payment solutions, revolutionising the way financial transactions across the global landscape.
Cross-Border Payment Dynamics:
The Global Remittance Market has been growing considerably and $530 billion is transferred each year. It is expected to reach $1.23 Trillion by 2030 and grow at a CAGR of 5.7% between 2021-2030, as per Adroit Market Research.
Payment platforms, digital wallets, and blockchain-based solutions have streamlined the payment transfer process, bringing down the transaction cost, and enhancing security measures. Advanced encryption technologies, biometric authentication, and robust anti-fraud measures have fuelled security while garnering trust and customer satisfaction.
The real-time payment systems have led to quicker fund transfers and reduced settlement times, facilitating faster international trade and financial activities. The introduction of common standards for transaction data has enhanced transparency in fee structures and has contributed to the development of a secure and seamless cross-border payment environment. Cross-border payments directly impact the progress of several developing and progressing countries, where money through remittance is the fount of their sustenance.
Challenges experienced in Cross Border payments
Plummeting challenges that develop alongside the growth of cross-border payments limit progress.
Negative Customer Onboarding:
Lengthy verification processes and inconsistent regulatory compliance, lack of transparency, growing security concerns are causing inconvenience, and hampering positive customer experience.
89% Percentage of the Corporate Finance Team faced poor KYC with 13% moving to different banks. € 990 billion a year in GDP losses due to fraudulent transactions, where fraudsters are using diverse ways to manipulate. It almost takes 100 days to onboard new corporate customers complying with revised regulatory requirements, which vary based on the product and the brand. Over 68% of the customers delay or abandon the application process due to hurdles within the process from the volume of data demanded to complex digital workflows.
More than 10 times the customers on average are asked for additional information and as many as 100 documents according to Forester. To counter this challenge, it is essential to implement efficient and user-friendly customer onboarding procedures, to build trust and enhance long-term relationships in the cross-border payment landscape.
Payment Payouts- Their limitations and challenges
Several challenges hamper the process of Payment Payouts. According to the World Bank report, the average payout on the ticket value stands at 6.25% with potential increments for multiple counterparties in the payout chain. These figures exhibit significant variations across different market segments, service levels, and regions.
EMDEs (Emerging Market and Developing Economies) represent the primary recipient nations facing the most significant obstacles, including challenges related to unstable currencies, outdated technological infrastructures, and the need for de-risking strategies. Notable factors impacting these nations include stringent compliance checks conducted by counterpart banks, restrictions on capital flow, the policy of value dating adopted by banks, operational limitations stemming from non-standard banking hours, and the presence of multiple intermediaries.
Regulatory modifications specific to each country facilitate incoming transactions, albeit with varying degrees of stringency, making them susceptible to fraudulent activities and potentially rendering it challenging for banks to retrieve the funds. A significant majority of businesses and customers, accounting for 64%, are actively pursuing enhanced transparency regarding cost breakdowns and payment monitoring, aiming to prevent any concealed charges and mitigate the risk of payment disruptions.
All these are causing several hindrances to the payment payouts.
Generative AI- Superior solution to cross-border payments
It is high time to leverage the power of cutting-edge Generative AI to empower financial literacy and bolster security measures to thwart potential fraud:
- Streamlined Onboarding Process:
Chatbots equipped with Generative AI helps businesses address delays and streamline the customer onboarding process, potentially reducing the time-to-onboard (TOT) to a matter of weeks.
- Enhanced Financial Education:
Understand customer’s complex financial concepts, thereby empowering them to make well-informed decisions. These tools can untangle intricate financial queries and provide comprehensive explanations, improving overall financial literacy.
- Identification of Potential Bottlenecks:
Large Language Models (LLMs) effectively identify potential bottlenecks in the product-specific onboarding documentation, facilitating the timely completion of necessary procedures and mitigating avoidable delays.
- Fraud Prevention and Security:
Generative AI can simulate various potential fraud scenarios, enabling organisations to strengthen their controls and implement automated checks for customer Personally Identifiable Information (PII) validation. This ensures that onboarding processes remain secure and individualized, safeguarding against fraudulent activities.
Navigating AI Implementation by Ensuring Data Integrity and Fairness
The integrity of training models and data privacy are highly crucial within the landscape of AI. Organisations need to focus more on data privacy while maintaining the integrity of the training models for responsible AI deployment.
To build trustworthy AI systems, it is vital to address concerns related to potential biases and the credibility of information sources. Also, modifying biases and verifying data sources are essential to enhance the accuracy and reliability of AI-driven insights.
Incorporating fairness standards within legal frameworks and regulations, while balancing technological advancement with ethical considerations is imperative to the implementation of robust fairness standards, ensuring equitable outcomes.
Implementing stringent monitoring measures can help mitigate the spread of misinformation, fostering a more reliable AI framework. Promoting greater transparency and establishing clear accountability among all participants within the ecosystem is crucial.
Transparency and accountability foster trust and confidence in AI-driven solutions, contributing to a more robust and ethical AI landscape.
Our CEO’s speech at the event highlighted how Generative AI if well managed within the future regulated framework can revolutionize cross-border payments.
Comprehensive emphasis on data integrity, enhancing customer experiences, and advocating fairness and transparency, stresses the pivotal role of technology in shaping a more secure and inclusive financial landscape for all.
His compelling insights underscore the transformative potential of Generative AI, signalling a promising future for secure and accessible cross-border transactions worldwide.
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