Enhanced Security System

Credit card companies, as well as credit card accounts, are the most
preferable weak links to malicious hackers for gaining sufficient money
without any immediate notice. It is highly risky for credit card issuers to
use the credit system on multiple online sites without confirming its
authenticity. Leveraging Artificial Intelligence provides an enhanced
security system of credit cards and utmost protection from frauds and
hackers. Fraud detection functionality is also utilized by these credit card
companies for immediate alerts of any unusual activity in any account for
a better credit system.

Better Customer Service

Credit card companies fall under the category of banks and other
financial institutions. Thus, here also Artificial Intelligence and machine
learning help these credit card companies in better customer service and
generate insights for customer-centric marketing campaigns. These
machines analyze demographic data and historical data of consumers
and help to offer any essential and attractive targeted promotions to
attract potential customers with better customer service.

Chatbots for Hyper-personalisation

Credit card users always tend to have some unique and different queries
regarding their credit card accounts and services. Implementing Artificial
Intelligence-based Chatbots can provide hyper-personalized services to
these customers for a better understanding of their queries through NLP.
Chatbots provide personalized solutions to each customer and also help
them to check the remaining balance, due amount, deadline, and many
more in any place at any time for a better credit system.

Approval of Transactions in Any Network

Machine learning algorithms can now approve credit card transactions
seamlessly without depending on a bank’s network. Visa has recently
created this advanced algorithm that can mimic a bank’s decision for
approval or denial of any transaction in a credit card. VISA has also
utilized deep learning neural networks to make a connection with a
human user and the past habits to study any unusual activity faster.
Thus, it is easier to receive approval of any transaction despite the
network status of that particular bank.

Offering Personalised Rewards

Implementing Artificial Intelligence into a credit card system can provide
personalized rewards to credit card users regularly to motivate them in
paying the spent amount within a specific date with interests. These
personalized rewards and offers are relevant and useful to these users
that also help to drive incremental returns for the advertisers. Some
restaurants and retailers offer massive discounts to disciplined users
who pay back the money in time for a better credit system. Some users
redeem rewards for one specific award in a category, especially
recommended by Artificial Intelligence. It analyses the historical data and
recommends useful and favorable products and services to each credit
card used as a reward. It also helps to offer rewards within a specific
location of a credit card user so that the person can utilize the reward
effectively without traveling long distances.

Alerts for Bill Payments

Providing constant reminders or alerts for bill payments is one of the
most important benefits of leveraging Artificial Intelligence in the credit
card system. It may be impossible for human employees to detect the
nearby bill payment due dates of hundreds of customers and provide
alerts to their phones through SMS or email. An Artificial Intelligence
model is known for its expertise in automating mundane tasks for human
employees. Thus, it helps to give reminders to customers for due dates,
renewal of a subscription, reward pending, and so on.
Effective targeting and retention: Consumers today have a problem of too many
credit card options to choose from. Issuers can feed first and third party data to
machine learning systems to come up with a target audience profile and the
relevant channels to share most appropriate card options. The same principle can
also be applied to timely target disgruntled customers and reduce churn.
Customer care: The advancements in machine learning are helping Natural
Language Processing (NLP) applications such as chatbots become more
contextual. Through chatbots, credit card issuers can ensure round the clock
assistance across all stages of customer interaction including product selection,
on-boarding, payments and usage. Smarter chatbots can also learn to detect irate
human behaviour and accordingly escalate queries to customer care executives.

Personalized rewards: Rewards are most important reasons for keeping a credit
card on top of the wallet. Machine learning can help issuing banks get a true
understanding of each customer and follow it up with tailored reward
experiences. American Express for example uses machine learning to recommend
restaurants to its card members. HSBC in the US has experimented with
predicting how customers are likely to use their reward points and accordingly
market its reward programs more effectively.

New revenue opportunities: Machine learning capabilities can help banks open-
up new monetization avenues. “Predictive spending insights", built on transaction
and third-party data is one such example. Case in point is American Express’s
AmexAdvance, that combines transactional and third-party data to brand
marketers and media partners deliver personalization services.

Implementing machine learning capabilities

Implementing machine learning is more feasible today because of the vast
improvements in computing power, the abundance of data as well as storage and
algorithmic advances. Like most other emerging technologies though, it is no
panacea, and to get the most benefit, issuers need to build the right capabilities.

Develop an AI roadmap: Credit card issuers should clearly define the purpose,
context and scope of why they would be using machine learning. In the short-term,
issuers can focus on proven application areas such as fraud detection and over a
period of time look at relatively more advanced use cases such as automated
rewards recommendation. Moreover, issuers can also work with academia and
technology partners to identify more futuristic use-cases.

Assess and build capabilities: According to a Harvard Business review analysis,

companies that have strong experience in digitization have a 50% higher chance of
generating profit from AI implementation. Issuing banks must therefore have a
robust digital foundation, especially big data analytics and cloud capabilities.
Finding the right talent, especially data scientists is also a big challenge and issuers
can work with their technology partners or collaborate with fintechs to bridge the
skill gap.

Stay on the right side of the regulation: Regulations such as GDPR have put
entire onus on protecting customer data with businesses, imposing stringent fines
for defaulters. Banks therefore must ensure complete compliance when venturing
into data dependent application of AI. Equally vital is to communicate with
customers on how their data is going to be used. This will also reinforce the trust
consumers have in their brands.

Be cautious about bias: Decisions of machine learning algorithms can be prone to

bias, one because they are designed by humans and second, because of the limited
available test data. Any resulting bias, for example in the form a denial of credit
card or inappropriate messaging may lead to regulatory sanctions and invite
consumers’ backlash. Choosing the appropriate data samples that minimize bias is
essential. Moreover, the insights generated by the system should be regularly
monitored, especially because such systems learn over time and may offer
unfavourable results in future.