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AI, IoT to play key role in Africa’s next gen of financial services — officials

The next generation of financial services in Africa is expected to be more characterised by Artificial Intelligence (AI) and the Internet of Things (IoT), experts have said.

Speaking during the final day of the Mobile World Congress (MWC) in Kigali on Thursday, October 19, officials who run financial businesses in Africa shared what they think about the future of financial services on the continent.

For example, in a presentation made by Faizah Naserian, a Kenyan community builder in the evolving domains of blockchain and Web 3.0, she noted that AI will play a key role in shaping personalised financial services, while IoT will be important for data in such services.

“Machine learning algorithms are transforming credit scoring, fraud detection, and customer service,” she noted.

She also pointed at blockchain technology as a means to revolutionise payment systems, cross-border transactions, and supply chain finance with transparency, security, and traceability in financial transactions.

Naserian also highlighted that cloud technology will facilitate scalable and cost-effective financial infrastructure, data storage, analytics, and application development for fintech companies.

Mobile payments, mobile banking, and digital wallets have gained prominence in Africa and are expected to do so even more in the near future.

According to McKinsey, between 2020 and 2021, the number of tech start-ups in Africa tripled to around 5,200 companies, and just under half of these were fintechs, which are making it their business to disrupt and augment traditional financial services.

McKinsey analysis showed that African fintechs have already made significant inroads into the market, with estimated revenues of around $4 billion to $6 billion in 2020 and average penetration levels of between 3 and 5 per cent (excluding South Africa).

Aimable Rukundo, a senior technical advisor at RSwitch, a Rwandan e-payments solution company, talked about how mobile payments are continuing to be strong in the country.

Giving an example of an informal survey he made, he noted that some people spend days without handling cash or using their bank cards in Rwanda.

He noted that when he asked some people about the last time they used their bank cards, some told him theirs had even expired.

Some of the key fintech start-up markets in Africa include Nigeria, Kenya, and South Africa.

According to KPMG International Limited, one of the key drivers of the uptake of fintech services in Africa is the spread of smartphones across the continent.

Key fintech services in Africa include payments, transfers, and foreign remittances.