AI, banking convenience in Southern Africa

By Taurai Mabhachi | 8h ago

In both the global and Southern African contexts, AI is being hailed as a game-changer, enhancing efficiency, security and customer experience.

THE rise of artificial intelligence (AI) has significantly impacted various industries, and the banking sector is no exception.

In both the global and Southern African contexts, AI is being hailed as a game-changer, enhancing efficiency, security and customer experience.

By integrating AI into core banking systems, banks can optimise processes, reduce costs, manage risks more effectively and improve service delivery.

For over a decade, digitisation has been gradually transforming the banking industry. Early adopters have evolved their business and operating models to better align with customer needs, moving away from a strictly feature-oriented focus to creating valuable and meaningful customer experiences.

Traditional banking, with its legacy systems, is rapidly becoming obsolete. Customers are increasingly migrating away from complex organisations with limited options toward agile, digitally native challenger banks that offer frictionless user experiences.

The banking sector in Africa, particularly in Southern Africa, must embrace AI to remain competitive. It needs to adopt AI to enhance efficiency, security and customer experiences.

AI can automate routine tasks like data entry and fraud detection, significantly reducing operational costs while enhancing overall efficiency. Additionally, AI-driven tools can improve the customer experience by making banking interactions more seamless and enjoyable

For instance, AI can support the Society for Worldwide Interbank Financial Telecommunication (Swift) messaging, enabling banks to connect and exchange structured electronic messages for common business processes like payments and trade settlements.

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Swift highlights that AI can streamline these processes, making them more efficient and secure: “Through Swift, banks, custodians, investment institutions, central banks, market infrastructure and corporate clients, can connect with one another exchanging structured electronic messages to perform common business processes, such as making payments.”

Southern Africa’s banking sector can also benefit from AI-powered chatbots, which are becoming the new face of customer service in banking. These chatbots can handle customer inquiries, assist with transactions and provide real-time information about account balances, all while ensuring robust security measures are in place.

Elsewhere in the world, Capital One is another example of a bank embracing the use of AI to better serve its customers. In 2017, the bank released Eno, a virtual assistant that users can communicate with through a mobile app, text, emails and on a desktop.

Eno allows users text questions, receive fraud alerts and takes care of tasks like paying credit cards, tracking account balances, viewing available credit and checking transactions. The AI assistant can communicate like human users do — even using emojis.

Southern Africa banking sector can embrace the Kasisto’s conversational AI platform, KAI, allows banks to build their own chatbots and virtual assistants.

KAI is designed to understand and generate natural language, making it capable of handling sophisticated questions about financial management.

Banks in the UAE, Singapore and other regions have already implemented KAI-based bots to assist customers with tasks like international transfers and card charges.

AI and machine learning offer significant potential for Southern Africa’s banking sector. These technologies can help identify fraudulent activities, detect system faults, minimise risks and enhance overall financial security.

Investing in AI is not a waste of resources; on the contrary, it can help banks better manage cyber threats.

According to a VASS article titled AI’s role in banking: Benefits and risk, in 2019, the financial sector accounts for 29% of all cyber attacks, making it the most attacked industry.

Africa is well-positioned to develop AI technologies that drive financial inclusion. The continent has a growing population of young people who are tech-savvy and comfortable using technology, even for banking purposes.

This demographic shift presents an opportunity for financial technology companies to develop and deploy AI tools that cater to the unique needs of African markets, according to a Jumo article of June 11, 2024, titled Can AI Solve financial inclusion in Africa.

AI is indeed something groundbreaking; hence its role in banking and financial services has been transformative since its inception. To this end, African banks can sponsor innovative hubs owned and run by universities in the region.

This will be important to ensure that Africa, and Southern Africa in particular, develop AI and machine learning tools for the financial services sector, including banks that are suitable for their environments.

These technologies would need to be user friendly for all segments of classes of the Southern African population like farmers, peasants, workers, communal farmers, students, rural populace, the educated and uneducated, and the elderly and young persons. Every person should be accommodated and never left behind in the use of AI, especially for baking purposes.

The banking sector in Southern Africa extends beyond just banking halls. We have other money transferring and receiving platforms like Mukuru, World remit, Western Union, EcoCash and so on.

African citizens need to be familiar with the apps of these money transferring and receiving agencies. For example, Mukuru is all over Africa, including in very remote and marginalised communities.

So its mobile money transfer app must effectively meet the needs of its international audience.

One of the key concerns for all account holders and persons using all money transferring and receiving agencies is customer service. Chatbots are typically the best in terms of practical applications of AI in banking. When erected, they can offer banking service 24/7, allowing clients to use their time more efficiently on inquiries that require personalised attention.

Southern African banks can also borrow from the chatbot for banking applications like the American Express and its AMEx chatbot.

American Express credit card holders can link their cards to the AmEx chatbot.

AI in banking has the potential of performing predictive analysis. Given that banks all over the world face risks there is need for risk predictors.

AI has the potential to assess large amounts of information. Its algorithm can identify patterns of behaviour and transfer them as risk predictors.

However, while AI holds great promise, it is not without challenges.

However, while AI holds great promise, it is not without challenges. Southern Africa needs to know that “all that glitters is not gold”. The use of large language models introduces new data privacy concerns and regulators may struggle to respond proactively.

Cyber criminals are also leveraging AI to create new forms of attacks, such as commercial and economic disinformation.

In conclusion, AI has ushered in a paradigm shift in the financial sector worldwide, and Southern Africa is no exception.

AI and predictive analytics can automate tasks, improve operational efficiency and reduce manual work in banking.

Yet, Southern African banks must approach AI with caution, ensuring that technologies are developed and deployed responsibly, with a focus on inclusivity and security.