By Gerhard van Wyk and Morgan Goddard
One of the key takeaways from the recent Massachusetts Institute of Technology (MIT)’s Initiative on the Digital Economy Annual Conference (2024) is that “human favouritism leads people to prefer content created by humans to that created by artificial intelligence (AI).” But it’s getting harder and harder to discern AI from the human touch.
And when it comes to the scientific development of technology tools ostensibly to grow access to financial services across Africa, the bots cannot be trusted to singularly churn out viable and truly transformative tools for Africa’s banks.
The opportunity to transform Africa’s developing economies by providing greater financial inclusion to underserved populations is an obvious one. Over 60% of Africa’s population is under the age of 25, and this young, tech-savvy demographic is increasingly digital-first, ready to embrace mobile financial solutions in particular, which can leapfrog traditional banking systems that have struggled to reach rural areas.
The continent’s rural-urban split, once a huge barrier, means that while cities benefit from expanding mobile banking networks, rural areas that lack brick-and-mortar banks can increasingly access financial services through apps, improving savings, investment, insurance and access to credit. By bridging these gaps, banking apps promise to not only empower individuals but also fuel broader economic activities, facilitating entrepreneurship, job creation, and more efficient transactions across borders.
But, as always, while the theory is sound, the practical reality is sobering (full disclosure, the paragraph above was largely written by ChatGPT. But what follows was not). We simply cannot leave the creation of banking apps amidst Africa’s culturally diverse and hyper-local specificities if we want to truly transform, empower and grow our continent through improved financial well-being.
If we are to meaningfully forge better and more meaningful inclusion in a world of extreme disparities and divides, the people directing, defining and developing the technology underpinning the banking applications of tomorrow have to innovate on a bedrock of deep understanding of the human beings and cultural dynamics operating in the real world.
Mobile-first, low-bandwidth solutions are widely regarded as vital structural enablers to bring banking services to rural and underserved communities. Kenya’s M-Pesa is a familiar example of a mobile phone-based money transfer service, payments and micro-financing service that services the continent.
But more transfer solutions like this alone aren’t going to magically accelerate financial inclusion and growth. Connectivity and access to the internet continues to plague rural Africa, especially those communities without reliable power. Economic disparities and price of data can also be prohibitive, and forward-thinking banks should consider building reverse-billing into their models to build reliability, trust and true convenience.
Another very practical reality is that often multiple community members share one phone, which brings security concerns, especially since a significant portion of Africa’s population lack the necessary digital literacy to effectively use mobile banking apps. This includes understanding how to navigate apps, perform transactions, and manage digital personal security.
Cultural values and attitudes to banking and technology on the ground can’t be overstated either. These can vary widely with a strong preference for cash transactions and face-to-face interactions in some areas, and a cultural taboo on women owning mobile phones in others. Overcoming these cultural barriers requires targeted education and on-the-ground outreach to build trust in the systems and people behind them, and not simply a desktop analysis from a plush office in Europe.
Enabling quick cross-border payments to strengthen global connections, particularly between the Global North and South, and across the African continent is key – but the critical part of this enablement is that transactions must be quicker. Cash is king in the informal economy, because it is quick to “process”. To meet the pervasive demand for quick processing, Bankserv has recently implemented the Transactions Cleared on an Immediate Basis (TCIB) system, which has allowed for the immediate clearing of low value transactions across the Common Monetary Area comprising South Africa, Namibia, Lesotho and eSwatini.
Another Bankserv product widely used in the South African market is the PayShap system. This allows for immediate clearing and payment of low value transactions between financial institutions in the country. This technology can easily be adapted and implemented in the context of the broader African continent where the demand for swift payment persists.
Finally, ignoring or kicking in touch solutions for the informal economy would be fatal. The informal economy is a significant, yet understated, part of many African economies. According to the African Development Bank (2018), “The informal economy accounts for an estimated 50–80 percent of GDP, 60–80 percent of employment, and up to 90 percent of new jobs in Africa, where more than 60 percent of the population performs low-paid informal jobs.”
Digitising transactions in the informal economy by creating systems and platforms for small entrepreneurs in this economy will undoubtedly create opportunities for these entrepreneurs to be included in the formal economy and improve prosperity. Here, financial transactions and products that the formal economy takes for granted like credit history, small and bridging loans, index-led investments, and disaster or business-interruption insurance can be the difference between a successful tomorrow or another generation reliant on subsistence living or aid.
In a recent modernisation project for an African bank, an integrated team steeped in financial services across disciplines delivered robust web, mobile and desktop solutions for the bank’s personal and business clients. Understanding the competing customer profiles and integrating their needs into client-facing entry points with the bank’s core infrastructure meant that both scale and a seamless, innovative experience could be delivered in a highly competitive domestic market.
The true test of modern banks on the continent will lie in their ability to successfully use the best of AI influence and ingenuity to meet African cultural attitudes and demands where they are, and applying the right people-led tech innovations to leverage these human connections into a digital world. As we chase this imperative, well-advised banks will place the importance of a human-led and culturally tested framework ahead of a slick machine-led product to make an impact on generations to come.
Van Wyk and Goddard are partners at iqbusiness’ tech design, build and operate division, iqx.
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