How big data promises value bank for clients and shareholders

Five years after the Data Protection Act, Kenya’s private sector is gathering momentum in incorporating cutting-edge technologies into mainstream business. PHOTO | SHUTTERSTOCK

Kenya hosted the 8th Annual General Meeting (AGM) of the Network of Data Protection Authorities (Nadpa) this month, in a forum that brought focus on how big data will shape the region. 

The meeting saw African information technology experts, business leaders and State regulators converge in Nairobi, to discuss opportunities and risks presented by the rapid adoption of big data analytics, Artificial Intelligence (AI) and Machine Learning (ML) in our daily lives. 

As one of the leading digital economies on the continent, Kenya’s adoption and mainstreaming of emerging technologies like AI/ML and big data analytics is often under scrutiny, just like it was during the mobile revolution 15 years ago.

The Central Bank of Kenya (CBK) recently listed cryptocurrency, green technology and quantum computing as some of the key areas where technological innovation will disrupt the banking industry. All of these will propel the adoption of big data and ML as financial institutions endeavour to create value for the citizens.

As far back as 2022, researchers at McKinsey were extolling the gains that African banks can make through smarter use of market and consumer data. This is a powerful tool to drive financial inclusion as banks seek to capture the unbanked and underbanked segments of the population. 

By using big data to analyse customer behaviour, banks can create more relevant financial products. This heightens the customer experience and gives products and services a competitive edge in a market. AI-driven experience on customer interaction points and products customised to the needs has a direct impact both on brand development and the bottom line.

Worth noting is that one in two people across the continent does not have a bank account, this presents a big opportunity for the sector, akin to the gap that existed in 2009 before mobile money went mainstream. 

Several lenders including Credit Bank, increasingly rely on big data analytics, drawing from historical analysis and forward-looking information, to inform current and new lending products. This was made more urgent following the effects of the Covid-19 pandemic that disrupted traditional economic models. 

Market data is just one of the pillars that stabilise the information technology strategy of modern lending institutions. Consumer data is the other pillar, and here too, Kenyan banks have a head start. 

Banks can leverage on transactional data including historical data on the adoption of different products and services to better attune their offerings to customers’ demands. 

Another front ripe for data analytics and AI is risk management; one study in India found that AI/ML models can be used to predict financial crises in the banking industry with reasonable accuracy. 

Five years after the Data Protection Act, Kenya’s private sector is gathering momentum in incorporating cutting-edge technologies into mainstream business.

As the financial services sector takes the driver’s seat in this exhilarating journey, industry leaders must remain abreast of the opportunities that exist and expectations of consumers and shareholders who desire a banking sector that delivers value for both.

The Writer is the Chief Digital & Information Officer, Credit Bank PLC - [email protected]

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