Jim McCarthy
CEO, Thredd
As transformation matures, the focus shifts to artificial intelligence (AI), compliance and efficiency.
Financial innovation continues evolving, shaping the way we interact with digital commerce. According to Jim McCarthy, chief executive officer of global payments processor Thredd, we’re currently in the middle stages of this transformation: while significant progress has been made, there’s still more to come.
Expanding payment convenience globally
As with the first modern credit card, Diners Club, which started as a card for New York City restaurants, consumer demand for ever greater utility continues to drive ubiquity. A prime example of this shift is Alipay’s integration of MasterCard credentials, enabling its users to make payments globally wherever Mastercard is accepted in what was once a massive, but closed, domestic system.
Apple Pay’s launch in 2014 transformed the way consumers engage with payments. Ten years later, leaving home to go for a run without a wallet and tapping a watch to pay for coffee or to enter a transit system still feels exciting, says McCarthy. Yet, even smarter experiences are emerging creating opportunities for businesses of all kinds.
AI: a tale of duality
AI will play a critical role in financial technology. Tokenisation — an innovation that essentially hides payment credentials — has been instrumental in enhancing security. The intersection of AI and payments is leading to new concepts like agentic commerce, where digital assistants powered by AI securely conduct transactions on our behalf with the help of tokenisation.
Yet, while AI is a powerful tool for security, it also poses its own risks. Fraud detection has always been an arms race not least because “the tools the good guys are using to fight fraud are often the same tools the bad guys are using,” explains McCarthy.
AI will play a critical role
in financial technology.
Protecting consumers from scams
Historically, fraud detection involved a degree of manual modelling. Today, AI automates this process, learning from vast datasets to identify fraud faster and more accurately. A big challenge in fraud prevention is human error. Many scams rely on individuals willingly providing information or transferring funds to fraudulent accounts. Unlike card-based payments, which have dispute mechanisms, account-to-account (A2A) payments lack the same protections.
Companies like Thredd, along with partners like Featurespace, a Visa company, are developing new approaches to mitigate these risks, such as AI-enabled scam detection services that flag suspicious transactions before they’re completed.
Regulation and compliance: a growing priority
In the early days of fintech, neobanks prioritised sleek interfaces and seamless digital transactions to differentiate themselves. However, as the industry matures, the focus has shifted toward regulatory compliance and operational efficiency.
As oversight has tightened, fintechs work to be more transparent and help their bank sponsors comply with regulatory standards. This shift is evident in recent back-office modernisation efforts. Automating compliance processes, enhancing fraud detection and reducing operational costs have become key focus areas for fintechs and their partners.
This is especially true as raising capital has become more expensive, prompting a closer focus on profitability as opposed to simply top-line growth. “Fraud disputes and chargebacks can really eat into your profits,” explains McCarthy. “Our clients are increasingly asking: how can you help me take cost out and run a more efficient and compliant programme?”
The future of financial innovation
While AI presents new opportunities for fraud detection and automated commerce, it also raises concerns about trust and security.
Ultimately, the future of finance will continue to be built on trust. As financial institutions, fintechs and ecosystem partners work together to create a safer, more efficient digital economy, the challenge remains the same: continuing to innovate while ensuring security, transparency and protecting the bottom line.
