FINAL WORD
Traditionally , cost has been a significant barrier for local SMEs when it comes to the adoption of digital financial services . In fact , it is estimated that around 90 % of transactions in Africa are still cash-based , and this is often because cash transactions do not carry any fees .
The use of AI has helped M-KOPA achieve significant increases in customer repayment performance , particularly for the follow-on products and services that M-KOPA offers to customers once they have successfully repaid their initial loan . In fact , more than 440,000 additional credit lines have been made to customers following payment of their first product .
Lillian Barnard , President Microsoft Africa
However , the ability for AI to lower the cost of the entire ecosystem of financial services , from fraud detection to risk management optimisation and compliance improvements , can lead to substantial operational efficiencies and cost savings , which can ultimately be passed on to the end-user .
With the digital payments market maturing quickly in Africa and AI rapidly gaining traction among fintech on the continent , the implications for accelerated financial inclusion are significant . Now , how do we ensure fintech are able to realise the AI opportunity ?
Can fintech surge ahead ?
Banks , for example , can make their services more affordable to their customers by rolling out AI-powered chatbots to manage routine queries , at the same time sparing them from having to travel to a bank branch .
Already , fintech companies are helping their customers to improve their financial literacy by using these same chatbots as affordable advisors . Drawing on the power of AI , these bots can produce personalised recommendations such as budgeting strategies so that the user can make a more informed financial decision . Mosabi , a company , in Sierra Leone has even gamified the process to help customers elevate their financial behaviours .
What is more , AI tools can analyse data from client discussions , producing legal documents in simple language and at a fraction of the cost of what it would typically take to draft a contract , extending access to these services in terms of both understanding and affordability .
Real time credit approvals
Perhaps most important of all , many fintech companies have access to vast amounts of data , meaning that when AI is introduced to the equation , they have formidable ability to offer real-time digital lending on a major scale .
M-KOPA , for example , leverages Microsoft ’ s AI services to manage lending risk and provide financial forecasting . The company provides digital financial services to underbanked consumers by combining digital micropayments and IoT technology .
This draws on cloud technology to process over 500 payments per minute , making it possible for 3 million people across Africa to access essential services such as solar power systems , digital loans , health insurance and smartphones .
Much of the answer lies with capacity building , from infrastructure to connectivity , skills and essential digital tools . With improved Internet access , fintech have the potential to access more data , and with larger volumes of data available , they can provide more innovative services .
It is for that exact reason that Microsoft continues to make significant investments to bolster the continent ’ s digital capacity , from new connectivity solutions through our Airband Initiative to essential cloud infrastructure through our enterprise-grade datacentres in the region . Through key partnerships , such as our collaboration with Safaricom , we are upskilling hundreds of thousands of developers to build new entirely new digital ecosystems .
Regulation is another hurdle that must be overcome to accelerate AI-powered payments in Africa . Though more African countries are expected to introduce regulations to guide AI development and deployment , relatively few have strategies and policies in place at a national level . In fact , many FSI organisations in Africa view the risk of new safety and regulatory requirements as one of the biggest stumbling blocks to wider implementation of the technology , hindering greater progress in financial inclusion .
Finding new ways of collaborating across industry and government is critical to the advancement of AI in financial services . To this end , Microsoft continues to engage with the African Union and national governments in priority markets to help strengthen our collective role as responsible stewards of AI .
For some time now , Africa has been at the forefront of the payment technology revolution , empowering millions of people with access to financial services . Imagine what more could be done through the unprecedented power of AI ? To turn that opportunity into reality tomorrow , we must begin by ensuring the groundwork for AI transformation is done today . p
80 INTELLIGENTCIO AFRICA www . intelligentcio . com