Essential features such as impartial artificial intelligence (AI) are either absent or underdeveloped in Africa's fintech ecosystem, compelling the development of additional solutions to provide tailored, discrimination-free financial services.
This is according to Bradwin Roper, the chief of payments partnership at JUMO, a fintech that uses AI to deliver financial products, collaborating with banks, mobile network operators, and other organisations to give services to individuals and small and medium enterprises.
Roper shared this insight with ITWeb Africa when discussing the role of fintech innovation in fostering financial inclusion across the continent, pointing out that traditional financial services frequently prioritise serving the most profitable customer categories, resulting in exclusion.
The interview with Roper came as the World Economic Forum pushing for the use of AI to transform financial inclusion, particularly in microfinance, by improving the efficiency, responsiveness, and customisation of financial services.
The JUMO executive explained that the company's work with AI is in response to the legacy banking system's negative effects on limited access, over-indebtedness, poverty (with the fintech's customers living below the poverty line (less than $2 per day), and gender inequality, citing that women are disproportionately underserved and that there is a significant gender gap in bank account ownership in Sub-Saharan Africa.
“Traditional financial services have often focused on serving the most profitable customer segments, leading to exclusion,” he said.
Roper continued: “JUMO's work with AI is a response to this, as it strives to eliminate bias in its models and ensure that everyone can be served. The company is committed to creating a ‘customer segment of one’ to enable the complete personalisation of an offer, free from any form of discrimination.”
Other critical aspects that appear to be underutilised within the continent's fintech sector, according to Roper, are customer protection standards and access to local finance.
He explains: “Until recently, a standard set of customer protection measurements for digital financial services providers did not exist. JUMO partnered with Cerise+SPTF on a pioneering pilot to establish these principles, highlighting a critical gap in the industry. This framework is essential to safeguard customers and promote sustainable ecosystem growth.”
When it comes to access to capital, he cited the Asset-Backed Securitisation (ABS), an e-money securitisation entity launched last year with Standard Bank.
ABS leverages e-wallet cash flows on mobile network operator platforms to pro-vide entrepreneurs with finance to expand their businesses.
The invention enables local pension funds and institutional investors to invest alongside major banks, implying that such local capital options were previously unavailable, according to Roper.
“This model reduces dependency on hard currency financing and mitigates foreign exchange risks, ensuring long-term sustainability.”
Looking ahead, he predicts that Africa's fintech sector will experience tremendous expansion and increased customer choice.
He stated that the number of fintech startups has nearly tripled since 2020, reaching around 1,263 active companies. Despite this, he highlighted that fintech companies' primary focus should be on client and ecosystem health.
“JUMO's CEO, Andrew Watkins-Ball, cautions that the industry needs to remain focused on prioritising customer and ecosystem health.
“The company’s efforts, such as piloting a framework for customer protection principles, reflect this focus on sustainable growth.
"The launch of innovative solutions like the e-money securitisation vehicle also indicates a future of financial products that are increasingly sophisticated and integrated with local capital markets,” he concluded.
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