As transactions in the global economy continue to cross geographical boundaries, there’s a growing need for tech that guarantees efficient, secure, and cost-effective exchanges. Today, the adoption of digital technology is no longer a question of who utilizes what, but a reality across the entire fintech spectrum, with around 73% of global banking transactions taking place through digital channels.
While technologies have long been a part of the evolution of the sector, none have made quite an impact as artificial intelligence (AI) has. AI’s integration has become essential across all aspects of business operations, and as AI leads businesses toward a boundless future, its increasing demand within cross-border payments presents both opportunities and challenges.
According to Statista, the AI market in fintech reached an estimated value of $42.83 billion in 2023, and grew to $44.08 billion this year, with no signs of slowing down. So much so that projections suggest a compound annual growth rate of 2.91%, positioning the market to surpass the $50 billion threshold by 2029.
As we speed through 2024, AI is set to keep up its momentum with continuous advancements, with its transformative potential expected to shake up the fintech industry. AI is expected to have a significant impact, especially in areas like fraud detection, risk management, customer service, and software engineering. Plus, we’re expecting to see major progress in personalization, where AI can enable the delivery of customized financial services and products.
In 2024, fintech companies are strategically leveraging AI to achieve their unique business objectives, mainly to enhance customer service and deliver personalized financial guidance.
Here, advanced AI-powered chatbots are leading the charge, skillfully handling routine inquiries and freeing up human agents to deal with more complex issues. This 24/7 availability of chatbots significantly boost customer engagement and satisfaction levels – giving fintech firms a competitive edge.
Furthermore, given AI’s ability to scan multiple data sources with speed and provide personalized financial recommendations to users, its evolution will see fintech’s leveraging it to boost the effectiveness of their fraud detection systems and risk assessment models. AI also has the potential to take algorithmic trading to a whole new level by optimizing trading strategies, predicting market trends, and acting on these predictions instantly.
As is the case with all new advancements, caution is paramount. Regulators have the complex task of promoting innovation while also implementing safeguards to address ethical dilemmas, ensure data privacy, and counter potential biases within AI systems. This delicate balancing act becomes even more complicated on a global scale, where tensions often arise between multinational corporations leading development and the regulatory efforts of national governments. Striking a balance between encouraging progress and enforcing necessary controls remains a crucial challenge in the pursuit of ethical and responsible AI integration worldwide.
Technological advancements are in a constant state of flux, with new technologies continuously emerging to offer greater levels of impact. Quantum computing, for example, is an area that holds significant promise by going beyond the limitations of traditional computing and offering exponential increases in processing power.
Similarly, neuromorphic computing, which mimics the human brain’s architecture, could create more efficient and powerful computational systems than ever before. By replicating the brain’s processes, these systems offer the potential for machine learning models that learn and adapt in real-time.
There’s no denying the game-changing power of AI, which is set to transform financial technology, especially in the area of cross-border payments.
But as the sector continues to welcome AI, it’s crucial to remember that ethics and regulation should be at the heart of its potential. It’s all about striking the right balance between innovation and responsibility.
By Anthony Oduu, Co-founder, Chief Product and Technology Officer at VertoThe post How does AI reshape global cross-border payments? first appeared on IT News Africa | Business Technology, Telecoms and Startup News.