AI eases East Africa's cross-border payments but not costs

Like many industries across the globe, artificial intelligence (AI) has taken the financial industry by storm, and one of the fast-rising applications is in payments, to solve age-old challenges that have slowed cross-border settlements in the banking sector.

In East Africa, banks have not been left behind in the latest revolution as nearly all have now deployed AI to improve their cross-border payment to local and international customers.

Jeremy Awori, who heads the Lome-headquartered lender Ecobank Group, says regional financiers are already using AI mostly to combat fraud in payments, boost customer experience, and enhance efficiency and speed of settlements.

"AI engines are studying transaction patterns," he told The EastAfrican. "And those can be used to help produce better customer experience, and to detect anomalies, hence minimise fraud or theft."

Thanks to AI, banks can now tell how frequent a Kenyan, for example, does business with a Tanzanian, and from that, recommend different products that could further facilitate their trade. It could also tell if someone makes frequent foreign trips, and recommend travel insurance, for example.

The machine learning tools can also tell if certain payments seem like ones you’d normally make or not, and stop any suspicious ones, limiting fraudulent activities, without the need for human intervention.

A new global study released this week by consultancy KPMG shows that the world over, AI is increasingly gaining traction in the financial industry.

The sector is the fastest adopter of the new technology, with at least 29 percent of polled firms already at advanced levels of using the systems.

Companies in the sector are mostly using AI for financial planning, accounting, and risk management, but there is also extensive use in treasury management, tax operations, and reporting, the survey found.

Yet, in the region, the near-magical technology cannot solve one of the oldest and most-pressing challenges in cross-border payments – cost. Currently, payment corridors in East Africa are some of the costliest across the globe.

A Tanzanian paying for goods or services in Uganda, for instance, would have to part with about 50 percent of the amount as transaction fees, and still wait for hours for the settlement to be completed.