How will generative AI revolutionize digital payments in MENA?

Everything related to artificial intelligence (AI) has boomed in 2023. Since OpenAI released the chatbot ChatGPT, AI seems to have an application in every aspect of life. But beyond generating images and conjuring up recipes for what you have left in the kitchen, how can generative AI affect the financial industry?

Here, Mostafa Menessyco-founder and CTO of fintech solution provider Paymobhighlights the impact that generative artificial intelligence can have on digital payments, particularly in the Middle East and North Africa.

The use of digital payments in the MENA region is growing at an unprecedented rate, driven by the increasing penetration of smartphones. With over 380 million mobile phone users, the region has one of the highest smartphone penetration rates globally, creating a huge opportunity in digital payments.

The rise of e-commerce has also contributed to the growth of digital payments, as consumers turn to online shopping for convenience and accessibility. While nearly 70 percent of MENA adults remain unbanked, governments are also taking steps to promote financial inclusion, recognizing the importance of digital payments in driving economic growth and development. All of these factors have combined to create a MENA digital payments market that McKinsey estimates will reach $80 billion by 2025.

In this rapidly evolving landscape, regional payment providers are seeking to leverage advanced technologies to improve security, improve customer experience and drive innovation. One of the most promising solutions is generative artificial intelligence, which has the potential to drive innovation and revolutionize the sector. MENA’s financial services providers are poised to leverage generative AI to create a robust, inclusive digital payments ecosystem – to the benefit of businesses and customers.

Fraud protection with AI

Fraud protection is a critical concern in financial services, and generative AI-powered fraud detection systems have proven effective in identifying fraudulent activity in real time. A recent Mastercard study showed a 50 percent reduction in fraud-related chargebacks using AI. These systems analyze large amounts of transaction data to identify patterns and anomalies that may indicate fraudulent activity. One of the challenges of piracy and fraud has been the cat-and-mouse game security providers build to solve the last exploited weakness, only for fraudsters to find another one.

Training in yet unseen examples of fraud, generated by AI and machine learning, is an opportunity to stay one step ahead. generative AI can produce new training data to train and retrain fraud models. This gives financial service providers an advantage in the constantly changing digital payment security. By harnessing the potential of generative artificial intelligence, financial services providers can improve fraud prevention, improve security and create a dynamic and inclusive digital payment ecosystem that benefits the entire value chain.

Generative AI can also transform voice-activated payment processing, allowing MENA payment providers to create more secure, convenient customer experiences. Customers can make payments by speaking commands, eliminating the need for physical cards or devices. Voice-activated payment processing uses voice recognition software to authenticate users’ identities and securely process payments. Generative AI can also increase the reliability of voice systems by analyzing vast amounts of voice data, identifying speech patterns and trends to improve voice recognition accuracy. In addition, generative AI can enhance the security of voice-activated payment processing systems with real-time fraud detection and prevention capabilities.

Improve the customer experience with personalized recommendations

Personalized recommendations are another area where payment providers can use generative AI to improve the customer experience. MasterCard Research shows that 61 percent of consumers in the region would be more likely to use a digital payment method if it provided personalized recommendations for products and services. Large language models can recognize and translate customer needs into requests – making personalized recommendations for products and services – and improving the overall customer experience. By providing tailored and relevant recommendations, payment providers can increase customer satisfaction and loyalty, drive innovation and growth.

Adopting generative artificial intelligence in the payment industry is not without its challenges, however. The requirements include high-quality data, sophisticated algorithms and the integration of AI-driven systems into existing infrastructure. But MENA’s financial services providers can overcome this by investing in talent development and the necessary infrastructure to support AI’s adoption.

Generally speaking, generative artificial intelligence in the payments industry is a game-changer. By harnessing their potential, financial services providers can drive innovation, improve security and improve customer experience, creating a dynamic and inclusive digital payments ecosystem that benefits the entire value chain. The future of payments innovation in the MENA region is promising, and generative artificial intelligence will play a crucial role in unlocking its full potential.