India's central bank to introduce AI-powered conversational payments  

India's central bank, the Reserve Bank of India (RBI), has unveiled a pioneering plan — an AI-powered conversational payments system within the Unified Payments Interface (UPI), India’s groundbreaking payment system that has propelled the nation as the world’s undisputed leader in real-time payments.  

"As artificial intelligence (AI) is becoming increasingly integrated into the digital economy, conversational instructions hold immense potential in enhancing ease of use, and consequently reach, of the UPI system," the RBI said in an official press release dated August 10.  

"It is, therefore, proposed to launch an innovative payment mode viz., "Conversational Payments" on UPI, that will enable users to engage in a conversation with an AI-powered system to initiate and complete transactions in a safe and secure environment. The channel will be made available in both smartphones and feature phones-based UPI channels, thereby helping in the deepening of digital penetration in the country," RBI explained.  

By providing language support initially in Hindi and English, the RBI aims to deepen digital penetration in the country. Furthermore, the system’s language support will be expanded to include more Indian languages in the future. 

The RBI’s exploration of AI-driven conversational payments demonstrates India’s commitment to the digital transformation of its financial landscape.  

Privacy and cybersecurity are the top risk concerns when implementing generative AI 

Even as most business leaders are confident in their ability to mitigate risks associated with generative AI, the majority of respondents rate privacy concerns with personal data (63%), cybersecurity (62%), and legal, copyright, and intellectual property issues (61%) as the top three risk concerns when implementing generative AI, as per the latest update of the 2023 KPMG Generative AI survey.  

KPMG carried out two surveys of US executives to gain insights into their perspectives on generative AI. The first survey was conducted in March 2023, right in the midst of the widespread excitement following the introduction of ChatGPT. 

After the initial hype subsided, KPMG went back to business leaders to gauge how their viewpoints on generative AI had evolved. In June 2023, KPMG surveyed 200 US business executives across industries in organizations with revenues of $1 billion or more. 

According to the survey, “Three in four business leaders (74%) rank generative AI as the top emerging technology that will impact their business over the next year and a half.” This is comparable to the results from KPMG’s March survey, where 78% said that “Generative AI would have the biggest impact on business above all other technologies over the next three to five years.” 

Given that cybersecurity and data privacy were the top risk-management focus areas concerning the implementation of  generative AI, the prioritization of risk management has increased across  the board since March.

“In both March and June, cybersecurity was the top area of risk management that business leaders are prioritizing. Risk management measures around weaponization (the use of generative AI to manipulate public opinion) has increased; 29% of business leaders ranked this as high priority in March and 56% did in June”, the report further added. 

Manufacturers embrace real-time payments for B2B transactions 

A recent study by PYMNTS and The Clearing House reveals a significant shift in the payment practices of manufacturers, with 86% of respondents prioritizing real-time vendor payments in 2024. The survey, conducted among 125 manufacturing firms, highlights the growing preference for instant and secure payment methods in business-to-business (B2B) transactions. 

The study unveils a remarkable trend: over 99% of manufacturing companies have already engaged in at least one B2B transaction using real-time payments over the past year. This surge in adoption underscores the evolving landscape of B2B payments within the manufacturing sector. 

Notably, 59% of these firms are planning to intensify their usage of real-time payments, marking a profound transformation in the industry's payment ecosystem. The allure of stronger supplier relationships and quicker transactions are driving this shift, with firms recognizing real-time payments as essential for nurturing vendor connections and facilitating prompt payments. 

The study also highlights a proactive approach among manufacturing companies to enhance their real-time payment capabilities. A significant 87% of respondents intend to innovate or expand their real-time payment offerings within the upcoming year, with partnerships with digital giants like PayPal and Stripe playing a pivotal role in advancing their strategies. 

The momentum toward real-time payments is undeniable, with no participating firm indicating plans to scale back usage. As manufacturing companies seek to navigate the changing B2B payments landscape, the focus on real-time payments is poised to accelerate, promising stronger relationships, faster transactions, and a competitive edge in the sector. 

Fitch Ratings warns that a slew of US banks could face downgrades 

Fitch Ratings has issued a warning of potential downgrades for numerous US banks, that could even include the likes of JPMorgan Chase.  

In an exclusive interview with CNBC, Fitch Ratings analyst Chris Wolfe highlighted the agency's decision to lower the "operating environment score" for US banks from AA to AA- in June, emphasizing that this move went relatively unnoticed as it did not immediately trigger downgrades on banks. 

Wolfe explained that if Fitch were to downgrade the industry's score by one more notch, from AA- to A+, it would necessitate a reassessment of ratings for over 70 US banks covered by the ratings agency. This potential move, according to Wolfe, might lead to negative rating actions. If such downgrades were to occur, even some top-rated lenders like JPMorgan and Bank of America could be affected, possibly influencing weaker lenders to shift towards non-investment grade status. 

Wolfe emphasised that Fitch intends to convey the possibility of bank downgrades as a genuine risk, although it isn’t a foregone conclusion. Recent downgrades by credit rating firms have already unsettled markets, with Moody's downgrading 10 US banks and placing major lenders under review for a potential downgrade. In a separate move earlier this month, Fitch Ratings downgraded the US credit rating from AAA to AA+ due to concerns over the US economy’s rising debt burden and the recent debt ceiling crisis. 

Credit card balances in the US surpass $1 trillion for the first time 

Credit card balances in the United States have surged past $1 trillion for the first time, according to newly released data by the Federal Reserve Bank of New York. The rise in credit card debt aligns with inflationary pressures and increased consumption levels. 

During the second quarter, the total credit card debt increased by $45 billion, pushing the total amount owed to $1.03 trillion, the highest gross value in the New York’s Fed data going back to 2003.  

As credit card use grew, so did the delinquency rate, with credit card delinquencies hitting an 11-year high, as reported by Reuters. This was measured using a four-quarter average, the regional Fed bank data showed. 

In the second quarter, credit card balances saw “the most pronounced worsening in performance” compared to other debt categories such as housing and student loan debt, as highlighted in the Fed’s release. The New York Fed Reported that total household debt climbed to $17.06 trillion in the same period, primarily driven by credit card balances. 

However, “Despite the many headwinds American consumers have faced over the last year - higher interest rates, post-pandemic inflationary pressures, and the recent banking failures - there is little evidence of widespread financial distress for consumers,” New York Fed researchers wrote in a blog accompanying the data release.