Agentic AI Streamlines Back-End Payment Operations in Banks and Credit Unions
Financial institutions are continually exploring new ways to leverage artificial intelligence (AI) to improve their operations. One such innovation is the introduction of agentic AI to back-end payment processing. Finzly, a fintech company based in Charlotte, North Carolina, is leading this wave of technological change in the banking industry.
Finzly, a core provider of payment services for banks and credit unions, is one of the pioneer payments tech providers to integrate with FedNow’s faster-payments system. The fintech recently launched its own AI agents, developed on AWS cloud infrastructure, to assist with manual and repetitive steps in back-end payment processing and operations.
Addressing Repetitive Processes Through Agentic AI
Booshan Rengachari, the CEO of Finzly, in a conversation with American Banker, highlighted that repetitive processes are a significant challenge for banks. He said, “Banks deal with a lot of manual, very repetitive processes. When you have someone do the same thing again and again a thousand times a day, the person can make mistakes or overlook something.”
He pointed out that legally-required OFAC screenings are an example of manual processes that can be automated by AI agents. He said, “Before you send a payment, regulations require the bank to screen the payment against the prohibited named list. Ninety-eight percent of the screening results are false positives. If you train an [AI] agent who knows how to make those decisions, it can cut down on false positives.”
Finzly’s Approach to AI Integration
Finzly’s AI agents are designed to be seamlessly integrated into a financial institution’s existing tech stack, functioning like a “Lego block.” Furthermore, Finzly’s products run parallel to legacy systems to ensure a smooth transition. “Our products run parallel to the legacy system, as you cannot rip and replace in a short period of time,” Rengachari explained.
For compliance purposes, Finzly has built its agentic AI tools with a human-in-the-loop governance model. Tony Desanctis, Senior Director at Cornerstone Advisors, asserts that human oversight remains crucial in the current state of AI technology due to the level of regulatory scrutiny banks are under.
“The current iterations of agentic AI-type solutions are a step of progress to automating portions of existing processes,” Desanctis said. He commended Finzly for their approach, explaining that their clients are unlikely to adapt a completely automated agent at this point.
Benefits and Challenges of Agentic AI Implementation
Banking analyst Myra Thomas from EMARKETER suggested that implementing AI agents on the back end can permit banks to reallocate their employees to other tasks. Despite the necessity of the human-in-the-loop governance model, the benefits of agentic AI are evident.
However, as with any new technology, there are challenges. One of these is upskilling employees to use the new technology, especially when human involvement remains necessary. Thomas said, “With all these rollouts of agentic AI and all sorts of AI across organizations, even with big banks where you have all these really smart, savvy people, there’s still an issue of upskilling that comes along with it.”
Finzly’s Position in the Payments Space
Finzly has already signed deals with 27 different banks as of 2023, providing them with access to various payment processors like ACH, Fedwire, RTP, FedNow, and Swift. These arrangements support cross-border payments with foreign exchange, trade finance, and treasury services.
Desanctis noted that Finzly’s focus on integrating agentic AI into legacy payment processing is a strategic move against the rise of agentic payments, a field that companies such as Paypal and Mastercard have been advancing recently. By making legacy payment processing less manual for banks, Finzly is not only slowing down the curve of obsolescence but also ensuring their relevance in the payments space.
According to Desanctis, “For Finzly, who lives and dies in that space, they don’t want it to go away. They don’t know if they’re going to be able to win on agentic payments at the consumer level, so they need to make sure that their existing processes are as efficient and automated as possible.”
The integration of agentic AI in the back-end operations of banks and credit unions represents a significant stride in the application of AI in the financial sector. While it requires careful implementation and upskilling, the potential benefits in terms of efficiency and cost-effectiveness are immense. As Finzly and other fintech firms continue to innovate, the future of banking seems set to be transformed by AI further.
Source: American Banker
