Payments & Transactions

How prepared are you for the next big thing in payments? Voice!

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Traditional banks are being reinvented. They’re aiming to be wherever their customers are and offer seamless contextual experiences. Unsurprisingly, transaction and payment services are one of the biggest disruption areas in banking. And while we don’t know what’s next, we know it’ll come at us quickly. In a blink of an eye, banks will have to manage the security of transactions coming from any imaginable channel. That said, we have some indicators, based on new technology, of what customers will soon expect of their banks.

One transaction channel ripe for widespread adoption—and fraud— is voice.

Mobile devices, cars, homes, the “Internet of Things” are now giving consumers new means of transacting—they’re also giving fraudsters new opportunities to steal. No doubt, this will be a topic at this year’s Money20/20 event.  Investing now in a cross-channel payment fraud solution that is configurable and can readily adapt to future payment channels is a topic I will be covering during my boardroom session, “The Future of Payment Fraud Prevention” at Money20/20 on Tuesday, October 23 at 10:15 AM. Make sure to register!

Research on voice activated payments, a growing method of transacting, shows that, by 2022, 31% of U.S. consumers will have used voice to make payments. And at least four major North American banks are experimenting with voice-activated apps for home assistants.

It’s been the case for the past few years that as new means of digital payments are introduced to the market, more techniques for fraud enter the market, too. Voice-activated transactions are adding to the complexity, as they offer yet another opportunity for card-not-present fraud.

Slowing down the adoption is the fact that voice payments are still relatively clunky — because authentication procedures are still clunky. Banks need to authenticate every transaction.  Voice-activated devices could theoretically use biometric verification, but their technology has yet to authenticate voices reliably. Spoken PINs, which are available on most home assistants, aren’t secure; so most voice activated transactions require multiple steps.

But beyond managing the authentication, banks have to worry about fraud, money launderers, and cybercriminals coming at them via every payment means. It is not enough to have facial or voice recognition technology on a mobile device, home assistant, or the phone lines into the call center. A bank, merchant, and payments processor have to guard every channel of transaction.

A vigilant bank, protecting its customers, its data, and its reputation, must have a fraud management system that protects ubiquitously. So what’s even safer than a customer’s voice, face or fingerprint and can be verified across any number of transaction channels? Their individual behavior.

Using AI, there is an increasing capability to make sense of the data each customer creates as they make purchases, travel the world, surf the internet, or even like their friends’ photos on Instagram. The behavior patterns that emerge —combined with biometrics—can be the way we detect and stop fraud.

In fact, we’re already doing it with IBM Safer Payments. But beyond just secure authentication, why is AI-powered authentication so important when it comes to voice-activated payments?

Three reasons:

1. Managing omnichannel transactions—faster

As customers, we are using an increasing variety of payment methods. In a given week, we might receive a paycheck via ACH, pay a friend back for dinner using PayPal, Zelle, or Venmo, buy groceries with a credit card, use Apple Pay while out jogging, wire money to a son or daughter studying abroad, the list goes on.

The best fraud management solutions run fraud detection against individual behaviors across all payment methods to reduce false positives. And to do that well, they can’t be black boxes — although most on the market these days are. The best solutions allow banks to integrate in their own data models, to better assess customer behavior. They also allow banks to use any data out-of-the-box as input— including payments, non-monetary events, authentication, cybersecurity data (malware and device data) and AML sources— to provide a full view of every customer, counterparty, intermediary, account, device, employee—and their relationships. The system must be open, so that any new data from authentication, security, customer behavior, or third party can be factored into the AI, even while running at full capacity. This is critical as we start to see transactions initiated via voice on any type of devices with any counterparty.

2. Adaptability for evolving consumer behaviors—and cybercrime techniques

New payment types, behaviors, locations are coming at us quickly, and IoT and voice activated assistants offer us a perfect example of how important open systems are. Regulatory changes have made merchants liable for fraudulent transactions. So imagine what that means for gas stations, who have points-of-sale at every pump—which have long been a prime place for card readers to steal card information. To replace every card reader would be prohibitively expensive; so many companies are turning to software solutions, like IBM Safer Payments to protect and prevent fraud.

At the same time, most new automobiles are now sold with voice assistants and 51% of voice assistants are used in the car now. What if, as you pulled into a gas station, you didn’t have to swipe a card at all: “Lexus, put fifty bucks on pump eight.” Your card would never leave your wallet.

So not only can AI-powered fraud management systems save the merchant the cost of replacing every point of sale, they protect the customer by adapting quickly to a new means of payment.

3. Building longer term value with customer-centric thinking

Perhaps just a byproduct, but by preventing fraud using unique individual behaviors and AI-powered solutions that can be easily updated, banks and payment processors can build user-centric applications that remove clunky authentication procedures.

With this technology, we can strip away a lot of the barriers for individual customers to accomplish whatever transaction. When  customers wants to split the bill, get paid on a non-traditional schedule, increase a line of credit–whatever it might be–instead of jumping through digital hoops, remembering all sorts steps for authentication, they can just ask for it.


I’m looking forward to discussing next-gen payments and fraud prevention at Money20/20. Make sure to come by and see me by registering for “The Future of Payment Fraud Prevention” at Money20/20 on Tuesday, October 23 at 10:15 AM.

If you you want to share your thoughts or learn more, you can schedule a meeting with me or one of our financial services experts via the IBM at Money20/20 site.

WW Sales Leader, IBM Safer Payments, Watson Financial Services

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