By Andrew Kabeera
Over the past decade, the banking industry has been part of the digital age continuously adapting the latest technology innovations to redefine how customers interact with banks.
The digital age, which is a successor to the Industrial age, has its peculiar challenges because most of the information is too massive, and the human brain may not have the capacity to make sense out of it.
That’s why Artificial Intelligence (AI) and machine learning comes in handy to make use of that information.
The thinking we have as PostBank is to leverage data to improve our banking experience for customers. How? Move away from static data generated traditionally, and look at dynamic data generated on digital platforms using AI.
Evidence from a Mckinsey report on building the AI bank of the future provides an interesting analysis about the AI-powered digital age, it indicates that with the falling costs for data storage and processing, increasing access and connectivity for all; and even the rapid advances in AI technologies will lead to higher automation and improve upon human decision making in terms of both speed and accuracy.
The potential for value creation is one of the largest across industries, as AI is set to potentially unlock USD 1 trillion of incremental value for the banking industry, annually.
Furthermore, a separate research by World Bank on AI Innovation in Financial Services, indicates that the deductions in the cost of internet connectivity, increased mobile device penetration, and increased computing power over the past decade have helped digital consumers, and businesses generate a wealth of new and real-time data through mobile phones and other digital devices.
Concurrent advances in data storage, computing power, energy reliability, and analytic techniques have made it cost-effective to analyze this wealth of realtime and alternative data.
As a result, it is now increasingly commercially viable to begin integrating AI technologies into bank service offerings.
From a local perspective, I will paint a scenario for my tech savvy customer, if you indicate that you live in some city suburb such as Najeera, or Nansana; that information is as good as telling people that I know where my customer lives. But in terms of financial inclusion, it may not be because humans are mobile.
But what if I have access to my customer’s smartphone data beyond where they live? it is easy for the bank to offer services to that particular customer using the precision of their data based on their lifestyles choices.
So, as customers demand for more digital banking experiences: apps where they can learn more information about provided services, interact with people or virtual assistants, and better manage their finances; there’s a need to improve the user experience to keep those customers happy by adopting and deploying AI solutions.
Over the past year, PostBank has observed growth of our Wendi digital platform to 1.7 million users who use it for cash deposits, withdrawals, bill payments, group savings, and lately, Parish Development Model disbursements.
The Wendi platform is offering immense benefits to our customers including, access to low- cost and faster financial transactions, simplified group setup and cash disbursements modalities, and even offering additional business to agents.
Our banking operations are increasingly dependent on the use of application programming interfaces (APIs) to enable customers to track their money on the Wendi platform.
People need to understand that we’re building Wendi as a banking market place to take advantage of dynamic data, then building AI and machine learning on top of that to start making informed decisions.
As a government bank, we embarked on a new sustainable strategy from 2024 to 2028 to foster growth and prosperity for all Ugandans.
We want to bring the cost down, get more Ugandans on a platform, have visibility, then we’re able to support them.
For instance, we have realised that the use of AI for predictive analytics will help us to have better insights of our customers.
That means we shall be able to analyze customers’ habits, such as how often they log in or deposit money, and compare it to other data points to determine whether individual customers might be on the verge of canceling their accounts, or are planning to save more.
Most banks have been driving a product-led model. I have this product, you take it or you leave it, right? But the customers of today such as the GEN Zs, you don’t tell them what they want. Neither do they want to come to you!
You need to find them where they are. And you need to have flexibility in that whatever they want, they can have it by themselves.
Looking at the future, banking will remain but it will change the way we know it. Financial services will be required but banks will run as digital financial services or technology companies offering financial services.
But given extensive industry regulations, banks and other financial services organizations need a comprehensive strategy for approaching AI.
My view is that if we don’t regulate AI it will regulate us so, I think countries are moving towards that direction. Is there anything conclusive yet? No!
Even where we see our children using AI to answer exam questions, the regulation is not yet there. The capabilities are not yet there, so with innovation and as more AI is used, that’s when regulations will kick in.
But being a responsible bank, you are expected to do the right thing. All banking depends on trust, once you lose it then it’s unforgivable. So my hope is banks remain banks so that they can use these tools to keep the trust.
The writer is Executive Director and Chief Digital Financial Services Officer at PostBank Uganda.
