One of the most enjoyable topics we cover here at PaymentsNEXT is technology disruptions in the payments industry. We get a chance to get wonder-struck about things like artificial intelligence, virtual reality, chatbots, apps and smart solutions that innovators are applying to make financial services more appealing to consumers. Today, we’re looking at who’s using chatbots and where the technology is going tomorrow.

Business Insider provides an excellent overview of chatbots, who’s making them, where dumb bots and smart bots are already being used and what’s ahead. It’s a great place to start learning how far chatbots have come already whether it’s to help you with banking, learn makeup tips, order a burrito from Taco Bell or use Amazon Echo or Google Now at home. Tomorrow is already here today and so are a bunch of new challenges for fintech and the payments industry.

Thousands of new apps were created in 2016 and “2017 will be the year of the bot,” according to David Horton, managing director, innovation at Synechron. Chatbots and mobile messaging will drive innovation in 2017 says Evan Wray at MediaPost. Banking beyond the branch is a top priority writes René Lacerte in Forbes.

Boku/Pay by Mobile is just one of the new digital payment technologies poised to disrupt traditional payments technologies. Simply confirm your payment by SMS and see it in your next monthly phone bill. With new chatbot and payment technologies comes the need for security, evident in Akamai’s acquisition of security firm Cyberfend.

When it opens in January, Amazon Go’s new checkout-less and cashier-less convenience store will turn payments upside down. So simple – pick your products, pay with your mobile phone and leave the store. Watch for McDonald’s, Starbucks and other retail innovators to adopt new payment systems soon. In an American Banker article, Stessa Cohen says we had a female bank chatbots named Erica, Cleo, Penny and Nina, but wonders where the male chatbots are?

What are chatbots and who is building them – Business Insider are the future, whether we’re ready for them or not.

“It’s technology that’s inevitable,” Microsoft’s CEO Satya Nadella has said. On Tuesday, Facebook is expected to release a Bot Store in a launch that could define the next decade in the same way that the Apple App Store launch paved the path for companies like Uber to build a business off your phone.

So what are these chatbots, and why is everyone obsessed? Via Business Insider

Chatbot Tracker: Is 2017 the Chatbot Year? of thousands of chatbots were born in 2016. They pose as cocktail coaches and help ship gifts. There are airline travel chatbots that will book flight, hungry and hospitable chatbots that will even order you a pizza, chatbots that will memorialize dead relatives, vote-garnering political chatbots and, of course, banking chatbots.

“It is a one-to-one conversation providing research (product recommendations, prices, promotions, availability, etc.) and post-purchase customer service (delivery, exchange/return, usage, etc.),” said Craig Besnoy, digital transformation specialist at Mindtree. “Because the customer opts in, enabling the retailer to access a plethora of rich and explicit purchase-intent data, the bot or the sales associate can provide valuable advice and recommendations and build a personalized and meaningful relationship with the customer.”

But specifically looking at retail chatbots, what will they look like in 2017? “2017 will be the year of the bot,” said David Horton, managing director, innovation at Synechron. “The technology is here and now, and the implementation of the technology does not require a significant overhaul of existing systems and has become mainstream.” Via

2017: Messaging Apps Will Drive Mobile Payments, Change Ad Metrics

Brands no longer need to be sold on messaging apps. In the past 12 months, they’ve received validation from major players like Facebook, which opened up its SDK for developers to create bots on Messenger, and Apple, which rolled out the App Store for iMessage.

Not to mention, the top four messaging apps in the world already have surpassed the top four social networks, with nearly 3 billion monthly active users, per Business Insider.

2017 will be the year that brands and marketers ask: How can I deploy dollars in mobile messaging in a way that is authentic and complimentary to my overall digital strategy? To answer that question, consider the top three projections that will shape the evolution of messaging apps as an effective advertising tool. Via

How Banks Are Rethinking Customer Engagement In The Digital Era

To better understand the impact of technology on customer relationships in the banking industry, my company partnered with SourceMedia and American Banker to uncover how the industry’s top decision-makers are rethinking customer engagement for the digital era. Our survey – which involved more than 200 banking leaders and was conducted in August – found that banking beyond the branch, digital payments, and small business customers represent the top priorities for the banking industry over the next 24 months. By the numbers:

Everyone surveyed agrees that technology is a disruptor. Nearly all (91%) banking leaders surveyed agree that new technologies are dramatically changing the way they engage with customers.

Banking beyond the branch is the top priority. Looking ahead, banks plan to invest more in tech solutions that enable banking beyond the branch. Specifically, 86% report that mobile, digital payments, online/web are the top overall technology investment priorities. Via

Move aside, Apple Pay: Alternative mobile payment options based on your needs, you know Apple Pay – 23% of iPhone users have used it at least once. And you’re probably aware of PayPal, which has actually existed since 1998 in its web app form. But are you sure you’re using the mobile payment option that suits your personal needs? Let’s take a look at a few more innovative ways to pay using your mobile phone, phablet or tablet that you may not be familiar with. With mobile and wearable payments expected to reach $100 billion by 2018, it’s good to keep up with trends and see how you can make them work for you.

Boku is just one of the payment platforms which realized that there was an untapped resource when it came to payments: users’ mobile phone bill. Merchants have to sign up to Boku to be able to receive payments, but buyers don’t need to do anything at all in advance. You can pay by mobile, online or in person – simply confirm the purchase by SMS and next time you receive your monthly phone bill, you’ll see the payment in question listed under your regular subscription. This hassle-free method requires no downloads or installations and is already accepted by the Google Play Store, Sony Playstation Store and Spotify – and a lot of other merchants. Via

Akamai acquires bot security upstart Cyberfend have spent the better part of 2016 becoming intimately familiar with bots — the good kind, at least, i.e. chatbots that potentially can help them sell more products via social media and create more positive, enduring customer experiences.

The bots that Akamai and Cyberfend are intent on fighting come from the Dark Side (requisite “Star Wars: Rogue One” reference). They have been circling portions of retail and related marketing and advertising sectors for several years, serving a variety of purposes. Nowadays, in many cases, criminals can create bot armies, or botnets, deployed to maliciously use valid (but stolen) identification and payment credentials to attack e-commerce sites to bring them down, or perhaps create diversions or gaps in security that allow parties to make fraudulent purchases. Via

Amazon, McDonald’s Turn Up the Digital Heat on Retail is just one source of digital pressure. Payment volumes will substantially shift to mobile, owing to a combination of retailer investment and consumer demand. This includes large chains like McDonald’s, which has made a commitment to mobile order-and-pay in key markets in the next year.

In the same vein, grocery chains will also push hard to win over customers as the buying channel shifts to mobile. I fully expect to see a customer retention/attraction war in both the U.K. and U.S., focused on mobile and specifically non-perishables.

Additionally, the advancements in mobile payments in retail and hospitality will inevitably lead to a decline in the sales of Chip & PIN terminals, shepherding in “peak card machine.” Growing use of 3DS 2.0 will also have an impact, with its wider support for app-based purchases on mobile and industry leading security features. Although this will have very slow adoption in the U.S, in the European Union it will form the basis of the battle for the card networks to retain ownership over authentication following the revised Payments Service Directive (PSD2). Via Bank Think

How Can Chatbots Be the Future If They Are Stuck in the 1960s?, Bank of America announced yet another virtual banking assistant with a female name: Erica. Erica joins Cleo, Penny and Nina (developed by Nuance and used by Swedbank, USAAit’s and others) — all examples of bank chatbots and fintech financial assistants with women’s names. If this trend continues, traditional stereotypes of women and men will carry on in a digital era.

Of course, virtual assistants aren’t the first “things” companies have given female names. Hurricanes and ships have traditionally been given female names, though that started to change in the U.S. in the late 1970s.

And sure, banking bots, like Kasisto’s Kai and RBS’ work-in-progress Luvo, sometimes have androgynous names. In fact, some bots are even getting male names. For example, Goldman Sachs is working on “Marcus.” But here is a troubling difference. Marcus, for instance, will use bot technology to give advice on loans where the other consumer-oriented chatbots are more geared at providing customer services, like spitting out bank balances and bank hours. Marcus joins other fintechs, like Oscar, with male names. Some names are not explicitly male, but still connote a double meaning, such as the company Earnest. Via

Chatbots and challenges ahead

We hope you enjoyed this update on chatbots. There’s no question there are challenges ahead for the payments industry with the use of chatbots and artificial intelligence. Not the least of which will be the need for new and higher levels of security. We’ll have more on security in a future issue. Don’t forget to subscribe above to get free, regular updates on disruptions in the payments industry.