Lifestyle and Tech recently spoke with Brighton Chidoma, Senior Client Success Executive at Infobip on “Banking on the future: how Africa’s BFSI sector is leaping over legacy hurdles.
Here is a transcript of the interview where LnT stands for lifestyle and Tech and BC for Brighton Chidoma.
LnT: Can you provide an overview of how Africa’s Banking, Financial Services, and Insurance (BFSI) sector is leveraging digital advancements to bridge the financial inclusion gap?
BC: The primary challenge facing Africa’s financial sector is the high number of unbanked citizens. However, digital advancements are significantly improving access to financial services.
Platforms like M-Pesa and PESA have revolutionised mobile banking, allowing millions to perform transactions and transfer money. Additionally, digital remittance services like Mukuru have benefited the large migrant worker population in Africa.
Insurance digitisation is also gaining traction, with tech companies offering affordable micro-insurance products tailored to specific needs. This has made insurance more accessible to low-income individuals.
To address the lack of financial literacy, banks are incorporating financial literacy courses and activities into their digital channels. For example, Capitec offers a financial literacy chatbot on WhatsApp.
LnT: What specific role does conversational banking play in enhancing customer experience and financial inclusion in South Africa?
BC: Conversational banking, powered by Artificial Intelligence (AI) chatbots, significantly enhances customer experience and promotes financial inclusion. This technology provides accessible financial services 24/7, eliminating the need for customers to call contact centres.
Banks are increasingly offering chat banking services, allowing customers to perform tasks like checking balances, getting credit scores, and downloading statements through chat apps. This shift is driven by companies like Infobip and enhanced security measures from platforms like WhatsApp.
LnT: How are technologies like generative AI and chatbots, such as those developed by Infobip, transforming customer interactions in the BFSI sector?
BC: AI is transforming customer service in banking. Chatbots can handle routine inquiries 24/7, freeing up human agents to focus on more complex issues. For example, AI can analyse customer data to offer tailored loan options based on spending habits and financial goals. This personalised approach not only improves customer satisfaction but also streamlines operations, reducing costs and increasing efficiency.
LnT: What are some of the most notable success stories or case studies where AI-driven solutions have significantly improved customer engagement and operational efficiency in Africa?
BC: AI-driven solutions have significantly improved customer engagement and operational efficiency in Africa. For example, Vodacom uses machine learning to anticipate customer needs and offer personalised recommendations. Equity Bank has implemented an AI chatbot that enhances customer service by handling routine inquiries and providing information like ATM locations.
LnT: In the BFSI report, what key trends or insights emerged regarding the adoption of mobile and digital banking solutions across Africa?
BC: Mobile and digital banking solutions are rapidly growing in popularity across Africa. Platforms like M-Pesa and EcoCash have become dominant in many countries, offering a wide range of services from payments and transfers to micro-loans. Traditional banks are responding by partnering with fintech companies and investing in digital solutions.
In South Africa, there’s a growing trend towards mobile wallets and instant interbank payments. The Reserve Bank has recently launched a new system to facilitate these faster transactions.
LnT: How is Infobip addressing the risks associated with AI, such as algorithmic bias and data privacy, particularly in the context of banking and financial services?
BC: Infobip is committed to addressing AI risks like algorithmic bias and data privacy. We adhere to strict data privacy regulations and employ advanced encryption techniques. We also prioritise transparency, informing customers about data usage and providing options for data control. Additionally, we encourage ethical AI usage and discourage customers from sharing sensitive personal data.
LnT: Given South Africa’s unique economic landscape, how are banks and financial institutions tailoring their digital strategies to serve both affluent and underserved populations?
BC: To serve diverse customer segments in South Africa, banks are implementing tailored digital strategies. This includes offering tiered services to cater to different needs, leveraging alternative data to assess creditworthiness for underserved populations, and partnering with fintech companies to reach these segments. These strategies help ensure that everyone can benefit from digital financial services.
LnT: What impact has the rise of fintech, and digital-first banks had on traditional banking institutions in Africa, and how are they adapting to this shift?
BC: The rise of fintech and digital-first banks has increased competition and forced traditional banks to innovate. Newer banks often offer more digital-friendly services and focus heavily on customer experience. Traditional banks have responded by investing in digital platforms, partnering with fintech companies, and offering features like instant transfers and AI-powered support.
LnT: Can you discuss the significance of Rich Communication Services (RCS) in enhancing customer experience and how it compares to traditional SMS and other messaging platforms?
BC: RCS offers a richer customer experience compared to traditional SMS. Key features include multimedia support, file sharing, enhanced branding, and two-way communication. RCS also provides stronger security features, such as encryption and verification, to reduce the risk of fraud. Additionally, RCS allows customers to report spam directly to Google, holding businesses accountable.
LnT: What future advancements or innovations in AI and digital banking do you anticipate will further drive financial inclusion and growth in Africa’s BFSI sector?
BC: Future advancements in AI and digital banking can further drive financial inclusion in Africa. AI-driven credit scoring for the unbanked is particularly promising, as it can assess creditworthiness based on alternative data.
Additionally, voice and conversational banking in local languages can improve accessibility for underserved populations. Finally, AI-powered financial literacy tools can help individuals make better financial decisions and improve their overall financial well-being.
