It’s an age where Artificial Intelligence (AI) and Big Data are becoming an integral part of almost every industry. They are said to be defining the future of global economy. Big Data as we all know is becoming the most cherished asset for the blue-chip companies around the world and gradually we are witnessing a transition where even the smaller companies have started making full use of their data.

Kai Fu Lee, the author of “AI Superpowers,” has rightly dubbed data as the new oil and it’s needless to say that AI has been leveraging huge chunks of data like never before to provide the most valuable real-time insights and predictive analysis.

As per a report by Financial Express, PWC has estimated that AI with its brimming potential can add $15.7 trillion to the global economy by 2030.

AI and Big Data are like two sides of the same coin which has the potential to transform not just the BFSI landscape of the most developed nations but also the most underdeveloped nations.

Now, talking about underdeveloped nations, the picture of Africa comes straight to our minds. As per the World Bank data, 66 percent of the adults in Africa are unbanked. This obviously is due to a variety of reasons like lack of proper documents, no legal identity, credibility-oriented issues, limited access to information, other income related challenges, etc. Moreover, majority of the population has limited or no access to any financial service whatsoever.

This is where AI and Big Data have surfaced while trying to fill that void. Not only are they enabling financial access to the unbanked but are also said to be the future of African BFSI.

AI and Big Data at the heart of financial transformation in Africa

AI is an amalgamation of machine learning, natural language processing and cognitive computing and its ability to analyse Big Data in real time increases the pace at which financial institutions operate.

Faster and more efficient customer service: In Africa, many financial institutions are making use of AI and Big Data to interact with their customers round the clock and assist them with whatever queries they have, along with more focused solutions as AI has the ability to mimic, respond and solve problems like a human analyst without the restrictions of time and place. AI enabled virtual assistants or chatbots can attend to the queries of the customers at any time and provide more constructive solutions which also include notifying customers about products or deals relevant to them.

Non-biased approach: With AI and Big Data there is no biasedness or preconceived notions regarding the customers, as the customers are evaluated solely on the basis of data from a wide range of sources which gives them a fair and higher chance of accessing financial services.

Better credit decisions: AI and Big Data enable a more efficient and faster evaluation of a potential African borrower with close to accurate information which enable the financial institutions to make better credit decisions and also enables the borrower to avail opportunities at lower borrowing costs, making him/her feel more connected with the African financial system.

The financial institution on the other hand feels more secure with a data-backed decision and also better identifies high default risk applicants. To add to that, the credit-worthy applicants without a credit history also get a chance, as there are a variety of metrics that get analysed in a very short period.

It’s this ability that will change the dynamics for the unprivileged African population and with higher chances of getting credit and other services, more and more Africans will be drawn towards the BFSI sector.

Enhancing Cyber security: With AI, identification and response to threats become quicker and certain applications of AI in the fintech space also secure customer identity through facial recognition. Also with AI, new ways are being developed to improve money laundering detection. For instance, a South African AI application called Snode detects and responds to cyber threats across devices with their platform.

Digital banking and customization: AI and Big Data will enable the growth of digital banks and a host of fintech apps that will cater to the specific needs of the customers. With focused machine learning algorithms to better capture ground realities based on past customer patterns and alternative data (e.g., smart phone data) the Africans will get more personalized options.

Reducing operating costs: The operating costs of the financial institutions can be brought down as AI can perform most of activities which otherwise human agents do. For instance, South Africa’s fully digital TymeBank uses AI to interact with its customers online and via kiosks. It charges no monthly fees for banking as it saves a lot by not having branches and by using AI. To top it all, the customers can open an account in TymeBank in less than five minutes without any paperwork or having to go to the bank.

Financial inclusion: It goes without saying that AI and Big Data will bring financial inclusion in the continent as even the underprivileged low-income community will get access to the financial services like loans, credits through better credit-scoring algorithms, etc. Also, with AI there is no single touch point for identifying relevant data as it streams through the disparate data sources that exist and this way more and more Africans even with the lack of proper documents or identity proofs will be able to use BFSI services.