What Will Be The Role Of AI In UPI Infrastructure? Key Things That You Must Know
By Atish Shelar
The past few years has seen major advancements in the banking and financial services sector. Consumers’ growing desire for personalized, convenient, and autonomous experience has propelled banks and financial institutions to reevaluate the traditional products and services they offer. An outcome of this underserved need in the market is the digital payments landscape.
This metamorphosis isn’t limited to its ease of use or instant money transfer capabilities; it is a game-changing leap in how financial services are delivered, managed, and experienced. However, the deployment of AI in UPI has furthermore bolstered the concept of digital payments, contributing to its growth, convenience, functionality, and security. Let us understand this better by exploring the role that AI is playing in driving change in the Unified Payments Interface (UPI) infrastructure space:
The Changing Face of Digital Banking in India
- Data Security
Fraudulent transactions are a common challenge in today’s digital payments landscape. By integrating AI, banks and financial institutions can detect and mitigate cybersecurity threats, ensuring the integrity and confidentiality of UPI data.
- Credit Score
The use of AI tools can help in minimizing bias in credit scoring. AI-based evaluation encourages lenders to make data-driven decisions on the basis of factors like a user’s financial activities or education history. This helps them assess a borrower’s risk with accuracy, as well as determine loan approvals and credit limits.
- Fraud Prevention
AI-powered fraud management tools can monitor incoming data, analyze transaction patterns, and identify unusual or potentially fraudulent behaviours. This prevents various types of financial frauds, like phishing attacks, payment frauds, or identity thefts, and flag them in real time.
- Risk Assessment
AI can gauge unstructured data, patterns, and trends by referring to past incidents. This unique capability enables banks and payment service providers to project risk areas and accordingly make real-time decisions regarding transaction approvals or declines.
- Customization
Thanks to AI algorithms, banks and financial institutions can gather & analyze vast amounts of customer data, study user behaviour, and assess transaction history. Based on these findings, organizations can provide personalized recommendations and financial insights to users, thereby improving engagement, strengthening loyalty, and boosting sales.
- Finger Prints/Facial Recognition
AI-powered biometric recongition technologies involving facial recognition and fingerprint scanning serve as passwords that can unlock the UPI apps. This added layer helps to enhance security of UPI transactions, safeguarding users from potential payment thefts.
- Payment Optimization
Payment providers can leverage AI in real time to detect payment issues, strategically route payments, improve approval rates, and gain a competitive edge. This helps to minimize costs, automate processes, and develop tailored solutions to increase consumer confidence.
- Customer Support
AI-powered chatbots and virtual assistants are equipped to provide instant responses, give access to information, and personalize recommendations on the UPI. Moreover, they are available round the clock, which enables the UPI platforms to engage with customers and address their queries at any hour of the day, regardless of staff availability.
- Regulatory Compliance
AI solutions help automate and streamline compliance and make the processes more effective and efficient for financial institutions. This assists with risk management and regulatory affairs.
Bottom Line
It is evident that AI has become omnipresent in all spheres of our lives. But in the digital payments landscape, handling huge transactions while mitigating risks, errors, and frauds is challenging without the application of AI. With the government also promoting the integration of AI in the digital payments system to bring it at par with global standards, it is ideal for financial institutions to embrace change and reinvent their products and services with AI. Overall, the future of digital payments industry in India looks promising and secure for both payment service providers and users.
(The author is Atish Shelar, Chief Operating Officer (COO), IppoPay, and the views expressed in this article are his own)
