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Can AI solve financial inclusion in Africa?

11 June 2024

As former Kenyan Cabinet Secretary in the Ministry of ICT, Innovation and Youth Affairs,  JUMO’s President Joe Mucheru has seen how individuals and businesses across Africa face complex struggles to secure credit. Everyday African citizens are too often denied credit as they lack documents to verify their identity, prove employment, or evaluate their credit score. 

A global conversation on the promise of AI is raging. It considers how AI is generating advice for farmers on the best seeds to plant based on weather and soil conditions, to the technology’s ability to distil comprehensive raw data on topics as complicated as biodiversity loss, to reducing errors in medical diagnosis.

But, to date, there has been little assessment of the impact of AI on financial inclusion. 

AI can change that. Instead of requiring difficult to access documents, the technology can identify individuals using facial recognition. AI-powered credit scoring systems – with customers’ permission – can assess creditworthiness based on alternative data points, such as mobile phone usage, utility bill payments, and social media activity. This enables financial institutions to extend credit to individuals who were previously considered “unbankable”, unlocking opportunities for economic growth and poverty reduction.

AI can also support engagement between banks and customers, strengthening customer experience and trust in the financial system. For example, chat-bot driven systems can assess customer complaints and manage routine questions, freeing-up staff time to focus on more complex cases. 

All of this means that AI could significantly improve the lives and livelihoods of the informal traders that I buy my coffee and lunch from every day: the beating heart of our communities. The technology enables them to use their mobile phones to access a bank account to save money, agree a loan to scale their business, or renegotiate lending terms if they face an unexpected crisis. 

Africa is well positioned to develop and deliver AI technologies that drive financial inclusion. The continent has a huge and growing population of young people, who are the most connected generation of Africans in history, and are comfortable using technology – even for banking. This growing and increasingly digitized population represents an exceptionally large data set which enable financial technology companies to create and train algorithms faster than most regions in the world. 

At JUMO, we are working to deploy AI to increase access to lending and credit across Africa. JUMO’s platform makes it simple for banks to provide credit and savings to millions of new customers by managing huge amounts of information with cutting edge AI.

Our advanced data engine houses 15,000 predictive features and 100s of trained AI decision models that run machine learning algorithms on millions of mobile wallet, cell phone, and transaction data signals every second. Insights gleaned from this data are used to build increasingly accurate credit profiles for entrepreneurs and small businesses allowing them to obtain tailored financial services such as savings accounts and loans that would otherwise be unattainable. 

Our systems have reduced the error rate on credit by 80%, and we share that efficiency back with our customers in the form of lower borrowing costs.

Through groundbreaking advancements in state-of-the-art AI, JUMO is actively shaping the future of finance in Africa and gaining unparalleled insights into the needs and financial behaviour of emerging market customers.

To truly unlock the potential capabilities of AI to meet Africa’s populations’ needs, the potential challenges and risks of the technology must be understood and safeguarded, particularly in the financial sector. 

It is crucial to protect customer’s personal information through robust data and privacy measures that prevent AI systems from hacking attempts, data breaches, and unauthorized access. Companies must also ensure that biases in algorithms and training data are identified and addressed to prevent perpetuating existing inequalities that can lead to financial exclusion. We must make sure that all individuals are served equitably. 

To deliver this, governments, financial institutions, and technology companies must collaborate. Governments create enabling regulatory environments that can spark innovation and protect consumer rights. Financial institutions ensure AI solutions are accessible to everyone by investing in the technology’s research, development, and infrastructure. Finally, technology companies can develop user-friendly applications and platforms that cater to the unique needs of the African population.

Ultimately, by advancing AI technologies, mitigating risks, and investing in transformative cross-sector partnerships, AI will catalyze financial inclusion across the continent.  

Connect with Joe on LinkedIn