Visa has launched a $100 million initiative that will invest in companies focused on generative artificial intelligence — a technology that is attracting a lot of interest throughout the financial services industry.
Generative AI refers to the use of large language models to build AI that can create original content such as text or images. Investment has been pouring into generative AI for months, much of it geared toward improving how the payment experience can be personalized for consumers and merchants.
Eventually, generative AI can be used to develop new forms of financial services, shopping, marketing, risk management and other uses. But to reach that stage, AI companies will need a partner that can provide immediate scale, experts say.
"Visa is one of a handful of companies that brings together payments experience, access to data and global scale in ways that could position them to make impactful investment decisions," said Christopher Miller, lead analyst for emerging payments at Javelin Strategy & Research. "Merely having these capabilities isn't the same thing as actually being able to leverage them."
Visa did not provide comment for this article. In announcing the fund, Visa contends that while most generative AI has been focused on "tasks" and content creation, it will soon "reshape" how people work and live and change commerce in ways that "we need to understand."
Visa's plan for generative AI
As a large payments company, Visa has the scale to know what problems exist that AI can solve. It also possesses expertise from implementing previous iterations of AI and automation more broadly, according to Miller.
"Visa has access to the kinds of data that can provide the fuel for differentiated large language models that can be applied to payment-specific problems," Miller said, adding that Visa's scale can be "transformative" in a way that's invisible to consumers and creates opportunities for the card network.
As a strategic investor, Visa can connect generative AI with its own massive data repository for a wide range of uses including fraud prevention and payment optimization, said Jordan McKee, director of the fintech research and advisory practice at 451 Research and S&P Global Market Intelligence.
"Importantly, Visa's central role in the value chain also means it can act as an accelerant for generative AI by connecting startups into the issuing and acquiring sides of the payments business," McKee said.
Several Visa programs that catalyze fintech development could benefit from Visa's investment fund by enabling generative AI startups to expand. Visa's
"In particular, Visa's Fintech Partner Connect program could serve as a way to efficiently connect its bank customers with generative-AI startups that have been Visa Ready certified," McKee said, referring to
And Visa is also active in providing development venues for its staff to share with third parties. Visa's
Visa has about a half dozen
This year, Visa partnered with Safaricom to launch a virtual card linked to MPesa, the mobile money service that Safaricom has operated for years to bring digital payments to underserved regions in Africa and elsewhere.
"I would expect GenAI to be a focal point of programs like the Visa Everywhere Initiative moving forward," McKee said.
A budding market for AI in payments
Visa's far from the only global company making investments in other AI providers. Just last week,
Additionally, the Swedish payments company
Investors committed more than $14 billion toward generative AI companies in the first half of 2023, according to
Other data demonstrates a bull market for generative AI investment. In the first half of 2023, more than 60 funding rounds totaling $1 billion involved fintech startups claiming to employ AI, according to S&P Global Market Intelligence. Digital lending, insurtech and investment and capital market technology segments were the primary beneficiaries, with each of these verticals witnessing more than 10 AI-based fintechs raising capital.
Other
"We expect generative AI to evolve considerably, but even in its nascent form, this powerful technology promises incredible opportunities when combined with human oversight," Mastercard said in its paper.
More recently,
Mastercard's Start Path has provided support for AI and fintech creators, Mastercard's public relations office said in an email, adding that Mastercard has deployed its
Large companies are creating opportunities by building partnerships and investing in generative AI, according to Jacob Steeves, a former Google AI engineer and co-founder and CEO of the Opentensor Foundation, an organization that encourages a more diverse range of AI development as an alternative to large technology companies.
These investments could greatly expand customer service and marketing, Steeves said. For example, it will soon be possible to conduct call center queries much faster, but with much less human staffing and reading time "on hold" listening to music, Steeves said.
Due to the improvement in language recognition and the ability of AI to produce original content, "now it makes sense to have an AI call center, whereas a few years ago it would have been embarrassing," Steeves said.
Advertising can also become more targeted, according to Steeves. "You could create products or offers on the fly for consumers," he said.
