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How Will Generative AI Revolutionise Digital Payments in MENA?

All things artificial intelligence (AI) related have boomed in 2023. Since OpenAI released its chatbot ChatGPT, it appears AI has a use case in every facet of life. But beyond generating images and conjuring up recipes for what you have left in the kitchen, how can generative AI impact the financial industry?

Here, Mostafa Menessy, co-founder and CTO of fintech solution provider Paymob, highlights the impact that generative AI could have on digital payments, particularly across the Middle East and North Africa.

Mostafa Menessy, co-founder and CTO of fintech solution provider Paymob
Mostafa Menessy, co-founder and CTO of Paymob

The adoption of digital payments in the MENA region is growing at an unprecedented rate, fueled by the increasing prevalence of smartphones. With over 380 million mobile phone users, the region has one of the highest smartphone penetration rates globally, which presents a massive 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 per cent of MENA adults remain unbanked, governments are also taking steps to promote financial inclusion, recognising the importance of digital payments in driving economic growth and development. All these factors have combined to create a MENA digital payments market that McKinsey forecasts will reach $80billion by 2025.

In this rapidly evolving landscape, regional payment providers are seeking to leverage advanced technologies to enhance security, improve customer experience, and drive innovation. One of the most promising solutions is generative AI, which has the potential to drive innovation and revolutionise the sector. MENA’s financial services providers are poised to capitalise on generative AI to create a robust, inclusive digital payments ecosystem – benefiting 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 efficacy in identifying fraudulent activity in real-time. A recent Mastercard study showed a 50 per cent reduction in fraud-related chargebacks using AI. These systems analyse large amounts of transactional data to identify patterns and anomalies that could indicate fraudulent activity. One of the challenges with piracy and fraud has been the cat-and-mouse game security providers find themselves in – building to address the latest exploited weakness – only for fraudsters to find another one.

Training on 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 re-train fraud models. This gives financial services providers an advantage in the ever-changing digital payment security. By leveraging generative AI’s potential, financial services providers can improve fraud prevention, enhance security, and create a dynamic and inclusive digital payments ecosystem that benefits the full value chain.

Generative AI can also transform voice-activated payment processing, so MENA payment providers can 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 analysing vast amounts of voice data, and identifying speech patterns and trends to improve voice recognition accuracy. Additionally, generative AI can enhance the security of voice-activated payment processing systems with real-time fraud detection and prevention capabilities.

Improving customer experience with personalised recommendations

Personalised recommendations are another area where payment providers can use generative AI to improve the customer experience. Mastercard research shows 61 per cent of consumers in the region would be more likely to use a digital payment method if it provided personalised recommendations for products and services. Large language models can recognise and translate customer needs into requests – creating personalised recommendations for products and services – improving the overall customer experience. By providing tailored and relevant recommendations, payment providers can increase customer satisfaction and loyalty, driving innovation and growth.

Adopting generative AI in the payments industry is not without challenges though. Requirements include high-quality data, sophisticated algorithms, and integrating AI-powered 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.

Overall, generative AI in the payments industry is a game-changer. Using its potential, financial services providers can drive innovation, enhance security, and improve customer experience, creating a dynamic and inclusive digital payments ecosystem that benefits the full value chain. The future of payments innovation in the MENA region is promising and generative AI is set to play a critical role in unlocking its full potential.

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