FIS rolls out AI-based transaction routing at checkout

• Key insight: FIS plans to expand agentic AI to payments.
• What's at stake: Other bank and payment technology firms are also embracing new forms of artificial intelligence. 
• Forward look: As agentic commerce expands, FIS' bank clients will be pressured to formulate a strategy. 

Agentic AI is still a relatively new technology in the financial services industry, but FIS' David Keenan says it's important to have a strategy in place now.

"Our grandkids won't know what a browser is any more than they know what a phone book is," Keenan, global head of payments networks at FIS Global, told American Banker. 

On Thursday, FIS announced Smart Basket, a product that analyzes a shopper's behavior to proactively apply optimal incentives and payment methods at checkout, seeking the most economically sound option. Smart Basket is designed to automatically perform this task based on the bank and consumer's opt in, with little or no human supervision following onboarding.  

The release enables FIS to respond to the growth of agentic AI in payments, enabling more functions to be performed with less human interaction, a trend that is driving new technology investment from payment companies and banks of all sizes.

"There's going to be a shopping revolution, and Smart Basket will position buyers and sellers for this revolution," Keenan said.

FIS' agents

FIS, which has been embedding agentic AI into its bank technology to improve interactions between bank staff and clients, is extending the technology to route transactions based on factors such as processing speed and cost. Such routing is also offered by other payment companies and financial institutions to manage the cost of processing and consumer incentives such as points and rewards. 

The growing popularity of agentic AI, which performs tasks automatically, is putting pressure on payment providers to compete. Stax, for example, has added payment processing tools to give it more control over the data used to guide agentic commerce, in effect serving as a competitor to companies such as FIS and Fiserv that power payment technology at banks. 

FIS Smart Basket, which will be formally introduced in the near term (FIS did not release the date), will integrate three existing services FIS offers: a real-time payment gateway, a loyalty marketing platform and spend analysis to enable payment method selection for individual items in a consumer's shopping cart. 

"The sellers can create better experiences, the brands are able to better reward consumers and the financial institutions can create better loyalty programs," Keenan said. 

Consumers can access "personalized" reward savings, and automatically select the best payment option, covering debit, credit and prepaid cards as well as other options such as flexible health care spending accounts – eliminating manual steps to access incentives, FIS said. 

"The shopper has an agent, the store has an agent and the bank has an agent," Keenan said. FIS, which reports third-quarter earnings Nov. 5, has recently addressed other payment technology trends that impact banks. The company recently partnered with Circle to enable banks to make domestic and global payments in Circle's USDC stablecoin. FIS earlier launched Money Movement Hub, which enables financial firms to connect to multiple payment networks covering different payment types. 

FIS has spent the past two years refocusing on bank technology, after divesting a large stake in Worldpay in 2023, but is still active in payment technology as part of a range of services that it sells to banks. 

In a research note, William Blair analysts said key internal initiatives at FIS include implementing AI into product development, better leveraging data asset and bolstering digital capabilities.

"We believe FIS has developed and acquired more competitive products, driving improved customer retention and new business pipeline growth. As such, we believe the competitive position remains solid," William Blair analysts said. 

The market for Agentic AI

FIS is boosting its bank-focused agentic AI offerings as large payment companies, including Mastercard, Visa and PayPal, have all made inroads into agentic commerce in recent months. 

Mastercard, for example, released Agent Sign-Up, which lets the card network's Agent Toolkit users identify AI agents and access AI-enabled Mastercard products. Mastercard also introduced Insight Tokens, which enable security for agentic commerce, and agentic consulting services. Citi and U.S. Bank are the first announced bank partners for Mastercard's expanded AI shopping tools.

Mastercard's Agent Sign-Up's launch is timed to the Black Friday start to the holiday shopping season, and does not require merchant support or application programming interfaces for the checkout, payments consultant Richard Crone told American Banker. 

"The agent auto-fills sites and completes purchases, turning merchants and payment facilitators into passive fulfillment nodes," Crone said. "'Disintermediation Day' is near. Losing user interface control means losing data, attribution, and payment orchestration, which are the three primary levers of payment facilitator margin."