All the innovation in the world changes nothing if it fails to meet the needs of end-users.
And against a backdrop where expectations around payments convenience, speed, security and, increasingly, personalization have never been more heightened, innovation within the payments space is vital to both integrate and unlock these benefits.
“The payment space is rapidly evolving across the entire value chain and in three dimensions,” Kate Lybarger, head of payments innovation at Discover® Global Network, told PYMNTS, adding that it is crucial to be thinking about new and different solutions and experiences to wrap around the expectations of customers, while knowing that those expectations are always in flux and being elevated.
“The possibilities and intelligence available today give a very different life to trends that are shaping the industry, like artificial intelligence [AI], open banking, embedded finance and the like,” she said.
This rapid evolution of the payment space means that solutions must be ever-present, delivering on customer preferences with minimal friction, and delivering innovation that centers on the creation and capture of real value.
After all, as ice hockey player Wayne Gretzky once said, it is important to “skate to where the puck is going to be, not where it’s been.” That metaphor holds true when applied to the realm of payments innovation. Lybarger explained that while embracing a core focus on meeting emergent end-user expectations around seamless and secure payments isn’t new, the pace and variety of choices available to consumers have dramatically increased.
That’s why, she said, in order to manage and stay ahead of the velocity of change transforming payments, AI is emerging as a crucial tool for payments players.
AI is not a new concept, and its various iterations have been impacting the payments landscape for decades. However, the accessibility of today’s generative AI technology has transformed significantly with advancements like OpenAI’s ChatGPT in 2023.
“Generative AI’s democratization means anyone with internet access can become a consumer, creator and builder using this technology … the lift required to clean up your data in order to use AI doesn’t exist in the same capacity as it once did,” Lybarger said. This widespread access is both exciting and daunting, as it opens up new opportunities for innovation while also presenting new challenges.
“We’re at the beginning of the maturity curve with the deployments of generative AI at scale,” Lybarger said, noting AI’s capacity to “ease a lot of burden across those who are participating in the payments value chain.” She cited Discover’s recent collaboration with Google Cloud to enhance customer experiences by providing faster resolution times in customer care centers using generative AI as just one example of how the technology is already transforming the payments environment.
The journey toward leveraging AI in payments is closely tied to data and technical readiness. Technologies like Optical Character Recognition (OCR) have revolutionized the digitization of historical documents, making more data accessible for AI — but there still exists a need, one that is only growing, for skilled talent to develop and deploy AI solutions.
Separately, as Lybarger noted, AI literacy across capabilities and functions is paramount. Organizations must invest heavily in training and governance to ensure that AI is used responsibly and ethically. That’s because with the rise of AI, concerns about security, ethical use and compliance are inevitable. Lybarger emphasized the importance of developing AI models that manage bias, ensure transparency and provide equal opportunities.
Still, fraud prevention is a significant area where AI plays a dual role — both as a tool for fraudsters and as a robust defense mechanism, she added.
The operational readiness across sectors to embrace AI, as well as the tangible impact it is able to provide, can vary.
Against that backdrop, Lybarger highlighted the difference between regulated and unregulated industries. Regulated industries, such as financial services, must proceed with caution, ensuring compliance and addressing various scenarios. In contrast, unregulated sectors can move faster, but they still face accountability from various stakeholders.
An interesting sector noted by Lybarger is agriculture, which sits on decades of rich data. The use of AI in agriculture can significantly enhance productivity and sustainability, and as she explained, “a seed that’s sold to a farmer who grows it, who sells it to a processor, and on and on to that full farm-to-table chain, the volume of payments transactions inside that are huge.”
Looking ahead, Lybarger sees enormous potential for AI to transform the payments landscape. As open banking and other innovations mature, the collection and use of payments data will enable more personalized and efficient payment solutions. AI’s role will likely expand into operational and service-oriented applications, enhancing both customer and merchant experiences.
Lybarger said that by staying close to merchants, acquirers and consumers, Discover aims to understand and address their needs, ensuring that their payment solutions are both innovative and reliable.
As AI continues to evolve, the payments industry must navigate challenges around careful management of data, technical readiness and ethical considerations to harness its full potential, ultimately creating a more seamless, secure and efficient payment experience that doesn’t just meet customer needs where they are, but skates to where they will be in the future.
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