How the introduction of AI would impact the Credit Card industry

How the introduction of AI would impact the credit card industry

How the introduction of AI would impact the Credit Card industry

The credit card industry like several other industries have started leveraging Artificial Intelligence into its products and services. The industry is vast with many companies servicing millions of cardholders worldwide. Managing such a huge client base requires several aspects to be considered, many decisions to be optimized such as determining whom to issue a credit card, the credit amount or limit to offer, what benefits to offer and when, protecting against fraud, among others. Integrating technologies like Artificial Intelligence and Machine Learning can offer several benefits, enhancing the credit system and helping in the faster adoption of digital wallets.   Many banks and financial institutions around the globe provide different types of credit cards with different interests, exciting deals, offers, and rewards points to pay back the money spent using the credit cards. The convenience and security which credit card transactions provide have made it a popular mode of payments for several products and services.

The credit card market across the globe is not showing any signs of slowing down as it is predicted to hit US$103.06 billion in 2021 with a Compound Annual Growth Rate (CAGR) of 3%. Meanwhile, the global market of Artificial Intelligence is expected to rise to US$228.3 billion in 2026 with a CAGR of 32.7%. This clearly shows that there are opportunities to leverage Artificial Intelligence to improve and create a huge impact on the credit card market in the nearby future.

5 Factors where AI is Vital to Credit Card Market Sucess

Let’s delve into a few of the top factors where AI is vital to the success of the credit card market:

1. Enhanced Personalization

Some major credit card providers use AI to offer best rewards to the right customers, the rewards they most desire. According to a recent study conducted by Accenture, around 33 percent of customers who abandoned a business relationship did so because of a certain lack of personalization from the service providers.  There are several restaurants and retailers offering massive discounts to customers who pay back the spent money on a timely basis, ensuring a better credit system. AI recommends specific rewards to users analysing the historical data, recommending favourable products and services. Using AI, banks and credit card companies can now create reward programs based on basic demographic information, past redemption activity, buying behaviour and others. 

2. Enhanced Security System

Credit accounts are one of the most targeted and preferable weak links to malicious attackers who can gain enough money without facing immediate notice. Therefore, credit card companies find it risky to use the credit system on different online sites without verifying the authenticity of the users. Artificial Intelligence offers enhanced security to credit card users and companies providing utmost protection from frauds and cyber attackers.

AI, especially Machine Learning can help detect fraud by identifying patterns of behaviour and spikes in usage that precede a card user walking away from the account without paying, for instance, cases of Bust Out Fraud. Bust Out Fraud happens when a person acts as a normal customer and then buys products or services using a credit card with no intention of paying for the spent money.  Not just Machine Learning, there are other Artificial intelligence approaches that apply a series of rules to detect fraud. The advantage which Machine Learning offers is in locating and understanding complex patterns seen in real-life, the ones that are too complex for rules-based systems.

3. Alerts Mechanism for Payments

One of the major difficulties credit card companies faced a few years back is providing timely reminders to customers for bill payments. It would be near too impossible to manually send reminders to millions of customers about their payment due date. AI makes it easy for credit card companies to send constant reminders or alerts through SMS or email, detecting the nearby bill payment due date.  Technologies like AI and Robotic Process Automation (RPA) helps in automating mundane tasks performed by human employees. Some of the reminders automated by AI and RPA include due dates, renewal of a subscription, reward points, among others.

4. Improved Customer Service

Just like banks, credit card companies fall under the category of financial institutions and here too AI and Machine Learning plays a huge role in helping these companies better serve their customers. AI and ML help the companies gain insights into their customer activities and to create customer-centric marketing campaigns. Analysing demographic and historical data of consumers, companies can perform targeted campaigns to gain new customers, also enabling better customer service.

5. Credit Line Management

Usually, credit card companies look at credit line management by assigning a score to certain behaviours of borrowers. For instance, a customer using seven credit cards may receive a lower score considering the underlying risk. Points are added or deducted from the credit score based on certain behaviours the card companies expect to statistically align with consumers having good credit. However, sometimes even for users having an ideal record of paying bills on time, the credit score may be reduced, presuming the risk. This is where Machine Learning provides a much better ability to sort out such cases by determining and differentiating between borrowers who resemble those who continue to pay from those who do not. Because individuals are multi-faceted and several factors would have to be considered to understand true similarity, machine learning is the best and the most practical way to gain better results.


The more data AI collects, the more capable and effective it becomes. With AI, credit card companies are in a better position to help their customers and offer them the ideal options for their lifestyles. Most large banks are already leveraging the power of AI to make available easier and convenient options for customers to make payments, redeem reward points, get offers and so on. AI-powered credit cards are the future, offering hyper-personalization, relevant rewards, and bonus points to better serve the customers.

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