The application of tech to banking in Africa has the power to change people’s lives and bring them greater access to financial services. In this installment of 3 Things we look at a digital-only bank, the linking of regional payments systems and an AI chatbot.
Nigeria first. Then the world
“It’s Nigeria for right now, but the plan is to build a Pan-African digital-only bank,” declared Kuda Bank co-founder and CEO Babs Ogundeyi. He was speaking to TechCrunch, which reported that the digital-only retail bank raised $1.6 million in pre-seed funding.
Kuda customers get a free debit card and a chequing account with no monthly maintenance fees. They can sign up directly from the Kuda app, where they can access their accounts and financial management tools. Three of Nigeria’s largest financial institutions have already entered into partnerships with Kuda that will allow its customers to access 10,000 branches and ATMs where they can deposit or withdraw money free of charge.
So how will they make money? Ogundeyi said they “plan to match different liability classes to the different asset classes that we create. That’s how we make money, that’s how we get efficiency in terms of income.”
There are many unbanked people in Nigeria, and although smartphone penetration is also low, this app could reduce a number of barriers to banking such as the cost to consumers from fees, the distances people need to travel to get to a physical bank or agent, and the costs to banks of maintaining branches in both rural and urban areas.
Flow me the money
When it’s fully integrated in 2030, the African Continental Free Trade Area will represent a market of 1.2 billion people and a combined gross domestic product of $2.5 trillion across 55 nations. But an efficient payments system will be needed to handle the flow of money between countries.
The Association of African Central Banks has set up a working group to look at ways to connect the technology behind the Southern African Development Community Real Time Gross Settlement System, which is operated by the South African Reserve Bank, with payments systems in east and west Africa.
“Thinking that we would wait and have some big continental payment system? No, you’ve got to get the payments systems there to connect with each other,” Lesetja Kganyogo, Governor of the South African Reserve Bank, told Bloomberg. In addition to supporting the free trade agreement, he expects that linking the systems will remove some of the costs of having to use U.S. and European banks to settle payments.
Money talks (in multiple languages)
Getting African payments systems to communicate with each other seems easy compared to communicating with retail customers across the continent. There are more than 2,100 living languages in Africa, and 197 of these are institutional, which means they’re “used and sustained by institutions beyond the home and community.” South Africa alone has 11 official languages.
“A large part of the South African population has no access to financial services, and if they do, they can’t use them effectively because they can’t comprehend and express themselves comfortably in English,” says Thapelo Nthite, a fourth-year mechatronics student in University of Cape Town’s (UCT) Faculty of Engineering & the Built Environment, speaking to UCT News.
To tackle this problem, Nthite and others at UCT have created Naledi,a multilingual chatbot accessed by text or voice through WhatsApp and Facebook Messenger. It uses simple, natural language to communicate in English, Zulu and Xhosa, and there are plans to add more languages.
Described by her creators as “conversational AI,” Naledi can be used for banking transactions such as transferring money, buying airtime or buying electricity. The app monitors a user’s transactions and financial situation, and then generates personalized financial advice.
The team has created a firm called Botlhale AI Solutions to market and support Naledi, which will officially launch in November. They’re already getting attention: They were the grand winner at the 2019 Africa DataHack4FI Innovation Competition held in Rwanda.
“Artificial Intelligence is busy changing the world; at Botlhale we want to make sure Africa is not left behind,” Nthite told UCT News.
At this rate, it won’t be.
Douglas Warren is a co-founder of Walmer Road Writing. He’s a corporate writer with expert knowledge of financial markets, economics, insurance and commercial real estate.