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.”
Ecobank CEO Jeremy Awori at the Africa Financial Industry Summit in Casablanca, Morocco on December 9, 2024.
Photo credit: Vincent Owino | Nation Media Group
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.
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Britam half-year net profit hits Sh2bn on higher investment income
Insurer and financial services provider Britam posted a 22.5 percent jump in net earnings for the half-year ended June 2024, to Sh2 billion, buoyed by increased investment income.
The rise in half-year net profit from Sh1.64 billion posted in a similar period last year came on the back of net investment income rising 2.5 times to Sh13.27 billion from Sh5.3 billion.
“We are confident in the growth and performance trend that Britam has achieved, supported by its subsidiaries in Kenya and the region. Our business is expanding its revenue base while effectively managing costs,” Britam Chief Executive Officer Tom Gitogo said.
“Our customer-centric approach is fueling growth in our customer base and product uptake, particularly through micro-insurance, partnerships, and digital channels.”
The investment income growth was fueled by interest and dividend income rising 34 percent to Sh9.1 billion, which the insurer attributed to growth in revenue and the gains from the realignment of the group’s investment portfolio.
Britam also booked a Sh3.79 billion gain on financial assets at a fair value, compared with a Sh1.8 billion loss posted in a similar period last year.
The increased investment income helped offset the 12.7 percent decline in net insurance service result to Sh2.13 billion in the wake of claims paid out rising at a faster pace than that of premiums received.
Britam said insurance revenue, which is money from written premiums, increased to Sh17.8 billion from Sh16.6 billion, primarily driven by growth in the Kenya insurance business and regional general insurance businesses, which contributed 30 percent of the revenue.
The group has a presence in seven countries in Africa namely Kenya, Uganda, Tanzania, Rwanda, South Sudan, Mozambique, and Malawi.
Britam’s insurance service expense hit Sh13.6 billion from Sh11.3 billion, while net insurance finance expenses rose 2.6 times to Sh12.3 billion during the same period.
“Net insurance finance expenses increased mainly due to growth in interest cost for the deposit administration business driven by better investment performance. This has also been impacted by a decline in the yield curve, which has led to an increase in the insurance contract liabilities. The increase has been offset by a matching increase in fair value gain on assets,” said Britam.
Britam’s growth in profit is in line with that of other Nairobi Securities Exchange-listed insurers, which have seen a rise in profits.
Jubilee Holdings net profit in the six months increased by 22.7 percent to Sh2.5 billion on increased income from insurance, helping the insurer maintain Sh2 per share interim dividend.
CIC Insurance Group posted a 0.64 percent rise in net profit to Sh709.99 million in the same period as net earnings of Liberty Kenya nearly tripled to Sh632 million from Sh213 million, while Sanlam Kenya emerged from a loss to post a Sh282.2 million net profit.
