Name: Modernizing the Way Money Moves
Uploaded: 2025-05-07
Duration: 17 min 30 s
Description: Want a digital economy? You’ll need AI for that. There’s no part of financial services that artificial intelligence won’t touch, from customer service to fraud prevention. In this session, we’ll discuss where AI is making the most impact in finance and tackle the ethical challenges, reputational risks, and regulatory considerations that come with it.

Want a digital economy? You’ll need AI for that. There’s no part of financial services that artificial intelligence won’t touch, from customer service to fraud prevention. In this session, we’ll discuss where AI is making the most impact in finance and tackle the ethical challenges, reputational risks, and regulatory considerations that come with it.

Modernizing the Way Money Moves

Conferences

All right. So, We were in a conversation yesterday at this very event where we were talking about how Cobalt is still In existence still, we're still living our lives with this, and so much of the financial stack is still based on it. I feel like financial services is a tale of two, it's two tails, you know. On the one hand you have this aging financial stack that we cannot, we cannot move past because it would be highly disruptive. On the other hand, I know financial services companies are some of the greatest spenders of technology anywhere on the planet. Tale of 2. So, Bjorn, I want to start with you. Mastercard just made a new made an announcement, a new thing that is as far from cobalt as I can imagine. Can you tell us about it? Yeah, absolutely. Um, so, so, well, firstly, we're, we're, uh, Convinced that we are on the eve of a paradigm shift in commerce. I know that sounds a bit dramatic, but actually we believe that as we think AI is one of these big technology shifts like we've in our lifetimes only seen a few of it, and it will have a very profound impact on how consumers shop and pay for things and and uh. Today we're already seeing consumers massively moving from the previous browser search and discovery from products to move to AI platform for search and discovery, and once you've searched and discovered the product you want to buy, it's only natural that you then ask the AI agents to buy it on your behalf. We are deeply, deeply convinced that that will reduce toil for the consumer, accelerate things, make things simpler so that consumers can focus on what they like most and not having to crawl the internet to find what it is that they need, but it will only happen if you retain trust in the system and, and, and we've heard probably over the next, the last few days like, uh, these agents nobody controls them, you know, and so, so the big problem statements that we put on our teams is how do we ensure That the consumer Not necessarily the people here in the room, but my mother can trust the way that they shop through an AI agent, and what we've announced last week is essentially the framework in which consumers, banks, agents, merchants, and the whole ecosystem can work together for a High trust system and a high um consumer convenience system and that's about Making sure there's transparency that everybody knows that an agent is in the middle of a transaction and that therefore they're not surprised by that, making sure that there's security that the consumer is very clearly consenting and authenticated at time of a transaction and that the and it's recorded what they're actually instructing the agents to do. That's about having an audit trail of the chat and so that when something goes wrong, we can feedback what was actually agreed between the consumer and the agent, and that's also about them having consumer protections so there is recourse that with partners like AI and everywhere else in the world is an ecosystem place. And that's what we've announced last last week in order to give the parting shot to what I think the era of agentic commerce. Yes, and we're talking about agents constantly here. That's, that's absolutely the theme. So it's called Agentic pay. Um, and I, you know, my, my first thought when I, when I saw this was, well, who Who in financial services, who in banking, who at the end at the customer level is going, I really want an agent, you know, they're not doing that, right? They're just trying to solve a problem. Carlos, what problems do your customers have that this technology could possibly solve? Yeah, so our customers are, uh, large brands, um, stores such as Spotify, eBay, and they're looking for frictionless shopping experiences for good customers, us. They're looking to lower costs where possible. The financial infrastructure still is expensive in this economy. So, yeah, absolutely. And then the last, um, yeah, and, and growing problem is of course fraud management and all the costs that come with that and this whole discussion around agents. The true question is, what's happening with the digital storefront of our merchants? Is there really a world where we still, you know, go to a website of a brand? Order a pair of shoes and have that experience ourselves, or an agent take care of this effectively, completely, you know, taking that experience away. I don't have the answer. I think we're all trying to figure this out. Is this an addition? Is this another flow to payments and online commerce? Will this will this exist coexisting with e-commerce? Those are the questions our customers today have. The problem to solve remains balancing friction. And the fraud, that's right, main problem. And let's talk about that a little bit as intriguing as the as the the storefront thing is, my mind reels already with you saying that. Um, let's talk about fraud. So you can't engage in financial services without having to worry about fraud. There's um there's classic payments fraud, there's authentication problems, um what can AI do now? Uh, uh, to help with that, or is it just simply an escalating arms race, the latest technology, uh, the same problem? I think. Fraud, fraud management, fraud fighting is the classic use case in business school. It's been for the last 20 years when it comes to machine learning, a form of AI. It's just that the technology has reached a certain maturity that, you know, for example, for the company that I work for, we are really able in real time inference in real time to make. Very complex predictions around whether we're dealing with a good customer or a bad customer, and that has changed the game. So it's the skill of everything and in this case the access to billions, billions of data points in a couple of hundreds of milliseconds. That is mind blowing and it has changed tremendously the way we fight fraud. We see customers. Again we payments, right, our world, it's the the final step after all that work in awareness, conversion, a spend, you'll name it, that's very final step when it comes to the purchase. Can't go wrong. Back in the days, customers configured business rules when from country X at this hour from these type of banks blocked the transaction. That's pretty bad. You can imagine in terms of conversion. Now we're giving control a little bit more to an AI, which supposedly has, you know, higher precision when it comes to these decisions. Everyone welcomes that, but of course again that you're giving up control a little bit and sure there are tools for explainability whatsoever, but this is on the minds of merchants how to find this delicate balance between knowing what's going on versus Truly embracing all this cool technology to solve this problem. Absolutely. Let's see how many people in the audience who are, who here is concerned about fraud for your particular business. Raise your hand. Let's see if anybody's, yeah, all right. I think that 3% of we, we saw, I think a study at MRC it's, it's in our industry, 3% of revenues, um. The cost of fraud, yeah, average.jorn, Mastercard has a global footprint. You are concerned about this on a very macro scale. Um, how do you look at the application of AI in this area? So, so I, I, um, first kind of go, go back for a second to this forefront thing because I think but I think it's may be useful to just bring this to life for a second, uh, for people because it sounds a bit strange like, OK. When I, when I today I, I like to run when I go and buy a pair of running shoes, I go to a certain sites. I kind of find brows my way through all the shoes and there's an overload of shoes, of course, and, and it takes me a while and then I don't know if I have the right shoes from the right brand with the right good deal because I like a good deal like the any one of us. And it's laborious. When I go to an agent, I say, Look, you know, I'm a runner, I do long distance. I want comfort over performance. I'm slightly overpruating and therefore need stability shoes, and I like a good deal. And then the agent will come back and says, Oh well, here I have a Hooka stability shoe with great reviews, but I have an A6 with a 20% off at that store in Manchester. Do you want me to make a purchase? I said, yeah, sure, like get me that A6 good deal. That's what I wanted. I would never have found a good deal in that store in Manchester. I never go to that website. I go to my agent and, and I think suddenly I have. Gotten a good deal and, and, and, and, and avoided avoided an hour of my time to waste. Uh, and, and so that is why we believe that this will actually turn in a very meaningful way, not for everything, but for quite a few soil kind of usage. But, but, but to the point that we made. You need to make sure that this is a real agent, not a rogue agent, right? And so the first thing that we do here is Identify and certifying agent and then the second thing that we do is when an agent has been certified as being a valid agent, what we give to that agent is something called tokens or agentic tokens. What this means is my credential as a consumer. is translated into a proxy for that credential with some very clever cryptography that we give to that agent that we bound to that agent. When a transaction is made at that store in Manchester, that credential comes back to us. We say, does that credential come from the right agent? Has it been authenticated by Jorn because it was his credential, and only then do we pass it back to the issuer. And by doing that tokenization, even if a bad guy gets their hands on that credential, we can bind it back to its origin. That is by architecting things in such a way. that we can at global scale. Avoid that that that um that uh the bad actors get to it. The issue remains the fundamental issue remains scammers because if I was the scammers, isn't it, if I as I lured in to make a transaction because I believe some kind of scammer did something and I authenticate a transaction, that's very hard. I mean, getting. Getting that so is very hard, and then that's where the cat and mouse comes in. They have great tools, we have great tools, and we'll see forever. I think that that cat and mouse, and we just need to make sure that we run a little faster than the other guy. Indeed, indeed, it's just like the cybersecurity uh category. I, I want to come to the audience for questions about financial services, um, but first, I just want to press on something that we touched on, and it's trust, um. You know, I can't imagine too many customers, whether they're B2B or B2C, are terribly concerned about how the transaction happens so long as it happens to their expectation. Is that right? They don't really have to concern themselves with trusting an agent because it'll just work to their expectations. Is that kind of the mentality in this category? Yes, it will have to work to the expectations and they need to have recourse. If, if the wrong shoes come through, I want to say no, no, no, this is not my size or this is not what I wanted and I need to have recourse against that and this consumer protection. It is extremely important because if the consumer feels like, uh, something bad happens and I am left on my own devices, then, then this whole thing will collapse like a card house, right? So very, very important that we embed this into that all the trail points and the point that the consumer will get the money back. If something goes wrong, it's very fundamental in this construct, right, right. Fair point. All right, questions for either gentleman about What they do. Oh, we've blanked them. We've stunned them. OK. OK. Oh, there we go. Great. Thank you. Just wait for the mic and then your name and organization, please. Forgive me, there's a light right behind you. Hello, hi. I'm Doctor Shiva from my bank and very interesting discussion. Um, I don't know how many people are aware of it now. There are a lot of, you know, duplicate stocks like they call Nike and all the different brands, but genuinely people believe that these are coming from that particular brand, but all like, you know, coming from wrong manufacturers, Taiwan or China. You don't get the real quality, but the money is gone. This a lot of fake websites and if you call them, nobody even picking up. It's all going into the automation thing now. Even happened to me, you know, I paid something and then it immediately taken another 400 pounds from Mastercard. But then, you know, struggle, we couldn't even get the money. So how can we solve that because everything is now going into AI and matching. Yeah, so, so, so, well, you should be able to get your money back, and the reason why you should be able to your money back is because players like Arian. Which are requires and PSBs, they on board the merchant in the ecosystem and they underwrite that merchant. They ensure that it's a legitimate merchant, very, very important task that they do. And when that merchant is on boarded, then they take responsibility that this is a good one. So if you get the wrong shoes or whatever, you got the wrong uh or the wrong Nike uh equipment, you can go back to your bank and say this is the wrong thing. The bank will come to us. We will go through Ain and say, Ain, your merchant is not legitimate or doing something wrong, and Arian will take responsibility for either correcting or shutting it down. That is how that ecosystem works, and the role of somebody like Aen is extremely important in making sure that the right folks are on boarded, and that's why that's that that is the the the magic of this worldwide ecosystem to make sure that everybody plays a role and that you get can get your money back as you. If you didn't manage to, then, then I think you have to speak to your bank because you should be able to. Here we go. Further questions. All right, gentlemen, I have another one for you. Um, You know, when I think about Financial services, I think about access, right? Especially on a global level. Um, there are plenty of people who, who don't have it. What element, if any, does the agentic aspect add to that? Will it reinforce bias? prevent access? Will it not really have any impact at all? Is there any new dynamic to that? Well, I, I, I have a, a perspective and, and, and I'm sure, uh, Carlo as well. So, so I, I think where the, the, the challenge with financial inclusion is at its heart one of identity. A consumer who does not have a formal identity, a passport, and identity card, cannot open a bank account, cannot be KYC, therefore cannot have access to electronic payments and is stuck in a, in a cash economy. That is a problem that across the world, governments are working with the likes of ourselves to to solve this and as it gets solved, they get embordered in the financial ecosystem. And, and, and that will then include their access to agentic payment if that happens. I think AI can help to some extent in getting the graph of that consumer, uh, distilling it that to to an identity because that consumer even without. A bank account probably has some level of access to internet or to to to to digital services, but that's kind of where it can help. But the fundamental issue is one of, of establishing identity and from there the rest flows. I think there will be a massive shift from Today's world operates in a real-time static verification check, right? I have to present my passport. This check is happening, and everything will shift to a behavior-based, you know, real-time monitoring behind the scenes to try and establish is this actor. Transacting or acting as expected, and here the scary part is that's where AI really comes in. Our behavior just looks like so many others, and these predictions that we continuously make, they will hopefully also open the doors to more financial inclusion simply because we do not have these strict and and very static checks sometimes at. Gate which might discriminate or or create problems at the at the gate for uh for good customers. Got it. Got it. All right, we're in the home stretch here, so lightning round for you. Uh, it's really just a yes or no, but I'll keep it simple. Um, will the application of AI in financial services increase spending? Yes or no? Yes. Yes. All right, there you have it. Thank you, gentlemen. A round of applause, please.