It is hard to imagine now that before November 2022, “AI” was a term relegated to science fiction, videogames, and buzzword-laced government announcements. That month saw the launch of ChatGPT publicly and the tech industry, and the world, changed.

For Microsoft in Africa, AI technology represents a potential to increase access to financial technologies for people, businesses and small to medium enterprises (SMEs). This is according to the company’s African president Lillian Barnard.

“It’s difficult to imagine a time before the widespread adoption of mobile technology in Africa – particularly where financial services are concerned. For millions of unbanked people, transactions were limited to cash, postal services or even the barter system,” Barnard writes in a statement sent to Hypertext.

“In much the same way as mobile payments completely disrupted the status quo, AI has the potential to propel the fintech industry into a new era of financial inclusion. And perhaps most exciting of all is that Africa is not simply catching up with AI-powered developments, but surging ahead.”

African companies are already looking at AI

Barnard says that African-started fintech firms are already adopting AI technologies in order to automate processes and lower costs, increases access to financial services for people and small businesses.

Already, homegrown fintech companies have changed the way people in Africa transact, helping to reduce reliance on cash transactions.

“Traditionally, cost has been a significant barrier for local SMEs when it comes to the adoption of digital financial services.”

“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,” Barnard explains.

She gives the example of banks, which if they roll out AI-powered chatbots to handle routine customer queries, they can make their services more affordable for customers and save customers travel time.

But not everyone can do this properly, and only real generative AI like that offered by OpenAI and companies like Salesforce that offer AI chatbots that can be trained to accurately respond to customers with human-like precision. But that technology is here in Africa and it can be utilised by small businesses if they know what they’re doing.

OpenAI’s API was used by a Nigerian developer to create Kainene Vos Savant, a chatbot than can answer questions in West African Pidgin.

There’s more to AI in fintech than reducing costs

However, according to Barnard, generative AI chatbots can be used for more. Including the promotion of financial literacy.

“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.”

She gives the example of Mosabi, a company in Sierra Leone that has even gamified the process to help customers elevate their financial behaviours.

“What’s 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,” Barnard adds.

SMEs need to focus on capacity building to make the most of AI

But with Africa being the leapfrog continent in terms of tech adoption, meaning that Africans rather leap ahead than try to play catch up – “the implications for accelerated financial inclusion are significant,” she says.

To ensure that SMEs on the continent can realise the full opportunity that AI poses, Barnard believes capacity building is the way forward.

“From infrastructure to connectivity, skills and essential digital tools. With improved internet access, fintechs have the potential to access more data, and with larger volumes of data available, they can provide more innovative services.”

Microsoft has been partnering with local corporations like Safaricom to upskill hundreds of thousands of developers to build entirely new ecosystems made for Africans, by Africans.

“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,” Barnard concludes.

[Photo by Igor Omilaev on Unsplash]