How is AI Being Used in the African Fintech Industry?
Artificial Intelligence (AI) is being used all over the world across industries to improve business processes and innovate new products.
This is a follow up from our previous post on how Africa is developing into a virtual and cashless economy. This article will expand on how AI is being applied in the African Fintech industry in order to cut costs, grow customer loyalty and enhance cybersecurity.
There are a number of companies using AI all over the continent, but here is just a short summary that gives insight into the benefits of using this kind of technology in the financial services sector:
1. How is AI being used to cut costs?
Some of the main applications of AI in the financial services sector are:
- Fraud detection
- Assessing risk and
- Creating better ways to evaluate customer credit to approve loans. With the ability to assess data more efficiently and find patterns, AI makes more effective predictions, so it is helpful when buying and selling stocks.
In a recent presentation by local AI expert Dr Jacques Ludick, one prominent use case of AI is in the local insurance sector. Churn is a massive problem, which essentially is when, customers sign up online to use a product but stop using it within 90 days.
With AI, businesses like these can avoid churn by being able to evaluate their customer data in a way that gives them insight into how to upsell and cross-sell products. They can also use it to predict if and when a customer is not going to make full use of the product.
Some other examples of using AI to cut costs include:
- Local Fintech company Strider Tech creates low cost online learning experiences on a customisable platform, with content that adjusts and improves consistently with machine learning.
- Jumo is a Pan-African company that uses AI to make a variety of Fintech services more accessible to consumers by matching them with the best product, based on their specific profile and needs. This cuts costs for companies as it provides a more efficient way for consumers to find and buy a variety of products.
- Clevva is a local South African company that creates what they call “Virtual Adviser (VA) apps” to make use of AI within the workplace, to better manage business processes and ensure consistency in task management across departments.
2. How is AI being used to grow customer loyalty?
The concept of customer success can be applied in a variety of applications with AI, as it provides a way of using consumer behavioural data to inform automated engagement, for example with the use of chatbots.
With an automated virtual assistant/chatbot, customers can interact with a company at any time, and queries can be dealt with in a more constructive way, which includes alerting customers to deals that would be appropriate for them, and easily resolving standard issues like claim procedures.
Some local and African examples are:
- South African company Bots ZA uses automated messaging as a more efficient way of interacting with customers to answer general queries.
- With a diverse approach to Fintech, Strider Tech also works to enhance customer loyalty by creating mobile interfaces that use AI to direct sales leads to the appropriate agent.
- Originating from Nigeria, Kudi is another African example of how text messaging through an automated chatbot can be used to improve the customer experience of paying bills and buying airtime.
3. How is AI being used to enhance cybersecurity?
Cybersecurity is a major threat to every business, but when it comes to your finances, security is absolutely critical, which is why AI is being used to more effectively manage threats by identifying and responding to these in a quicker and more efficient way.
Some specific applications of AI in the Fintech space include being able to secure customer identities, through facial recognition, and developing ways to better detect money laundering through pattern detection.
Some other examples include:
- Snode is a South African AI application that uses AI to monitor, detect and respond to cyberthreats across devices and storage facilities with their platform, The Guardian.
- When it comes to microfinance, Awamo in Uganda uses AI to reduce fraud when signing up customers and businesses to their platform, which operates as a digital banking platform and the credit bureau.
By just looking at the handful of examples above, it’s clear that the use of AI is growing, and it’s exciting to think of how many more similar applications are out there, working to improve financial services in the future.
While the thought of intelligence outside of the human brain might still be a scary concept to some, it’s important to keep talking about how incredible the scope for these kinds of applications is, and how they can be used to move past so many of the limitations we’ve had with accessing finance and processing data in the past.
SovTech believes in the transformational power of innovative technology. Get in touch with us to find out more about how we’re building innovative AI applications that are shaping the future in a positive way.
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