There’s a lot of hype around generative AI right now, particularly with ChatGPT. But while the technology can transform many sectors, including banking, changes aren’t going to happen overnight.
“Generative AI is indeed a real technological advance,” said Christopher Miller, Lead Analyst of Emerging Payments at Javelin Strategy & Research. “But it’s not going to happen this year or next year if you are a payments company. You have plenty of time to plan.”
In his recent report, Generative AI: It’s Here, and It Defies Static Definition,Miller delves into how banks and fintechs should maneuver to take advantage of generative AI. He also provides some reassurance that indeed, the world of payments isn’t ending, but rather is becoming more efficient.
Exploring Generative AI
Generative AI, exemplified by ChatGPT, is different from a search engine.
“Artificial intelligence has the capability of generating unique and novel content based on the data that is trained on as opposed to surfacing information that already exists,” Miller said. “The generative component is what makes it different.”
Short-term, AI may help automate repetitive work, helping employees do their jobs faster. But more fundamental changes are far off.
“The core of how payments are delivered isn’t going to change this year or next,” Miller said. “Some start-ups will have some ideas about applying it, but they won’t have any MVPs. One of my big points is that, while this is a big deal, you have some time to figure out how your company will adapt.”
While generative AI has the potential to revolutionize the payments landscape, its adoption is expected to be slower compared to other industries, particularly because of concerns related to data privacy and security. These concerns are especially important in the financial industry, where the stakes are high and the consequences of a security breach can be severe. As a result, it’s essential to work out all the details before deploying generative AI in the payments industry.
In addition to privacy and security concerns, there are other factors that may slow the adoption of generative AI in payments. For example, the regulatory landscape is complex, and there may be legal hurdles that need to be addressed. Furthermore, there may be challenges related to integrating generative AI with existing payment systems and infrastructure.
Learn more about how financial institutions and fintechs can position themselves wisely to take advantage of Generative AI, without being whisked away by the skepticism and hype.
