Identity Automation Moves Up the Payments Agenda

Payments modernization budgets are lining up behind identity, reconciliation and automation, providing a clearer picture of what businesses intend to build next.

PYMNTS Intelligence data, in collaboration with Plaid, shows 65% of firms plan to adopt or expand identity verification and know-your-customer (KYC) automation within the next 12 months, putting it ahead of secure bank connectivity and artificial intelligence-based fraud detection, both at 59%. Only reconciliation automation, at 70%, draws more near-term interest.

Here are four numbers from the report, “Payment Protection: Why Firms Still Aren’t Real-Time Ready,” that show where firms are putting their payments modernization efforts.

1. KYC automation reaches 90% when longer-term plans are included.

The 65% planning KYC and identity-verification upgrades within 12 months is only part of the pipeline. Another 25% say such upgrades are planned for later, bringing the total with stated plans to 90%. Nine percent are considering the technology without a timetable, and just 1% are not considering it. That makes identity and KYC one of the most broadly planned capabilities in the survey.

2. Reconciliation automation leads the near-term list at 70%.

Reconciliation is the only capability in the survey with a higher 12-month figure than identity and KYC. Seventy percent plan to adopt or expand automation that matches and clears payments against invoices, ledgers and bank statements. Another 28% have it planned for later, leaving only 2% either considering it without a schedule or not considering it.

3. AI fraud detection and open banking are tied at 59%.

AI is a significant part of the spending agenda, but it does not lead it. Fifty-nine percent plan to adopt or expand AI-based fraud detection within a year, exactly the same share as secure bank connectivity and open banking. For AI, another 23% have plans for later and 15% are considering it without a schedule. For secure bank connectivity, 30% have later plans and 9% are considering it.

4. Legacy infrastructure is still getting money.

Modernization does not mean firms are abandoning existing systems. Fifty-one percent plan spending on legacy infrastructure maintenance within the next 12 months, while another 41% have it planned for later. Just 2% say they are not considering such investment. The data points to modernization programs that must fund existing infrastructure while adding identity, automation, connectivity and AI capabilities around it.

Taken together, the investment plans put some definition around the next phase of payments technology spending. Reconciliation leads at 70%, KYC and identity automation follow at 65%, and AI and open banking each stand at 59%, while more than half of firms still expect to spend on legacy systems. The near-term modernization agenda is spread across several layers of the payments operation rather than concentrated in a single new technology.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.

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