Big-four banks take lead in SA’s GenAI, AI deployments

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 18 Mar 2024
South Africa’s banking sector is ahead of other local sectors in AI and GenAI adoption.
South Africa’s banking sector is ahead of other local sectors in AI and GenAI adoption.

South Africa’s banking sector is ahead of other local sectors in the adoption of artificial intelligence (AI) and generative AI (GenAI), with the big-four banks leading the pack.

This was revealed during the Financial Sector Conduct Authority (FSCA) Conference 2024, in Johannesburg.

Nolwazi Hlophe, senior fintech specialist at FSCA SA, noted that companies across the local financial sector are deploying and benefiting from AI and GenAI.

According to Hlophe, the big-four banks are the leaders in deploying GenAI tools that help them deploy advanced functionality to increase efficiency.

The payments, insurance and fintech sectors follow closely behind, as they increasingly deploy these emerging technologies due to their large-scale use of unstructured data.

“With the increasing market competition, AI has become the differentiator, with financial institutions harnessing the power of this technology to better serve their consumers and develop innovative products and services.

“They can also better understand how their consumers interact with their service offerings. We are seeing there are a lot more benefits now with GenAI, which enables financial institutions to build products, such as conversational services and chatbots − which allow consumer engagements 24/7 through a human-like interface − and voice assistants and predictive analytics,” explained Hlophe.

GenAI is seen as a game-changer in the banking industry due to its ability to analyse vast amounts of data, and generate images, texts, audio and other types of content, she continued.

It is estimated that GenAI will be a $60 billion global market by 2025, accounting for 30% of the total addressable market for AI in general, according to Boston Consulting Group.

Revolutionising banking

According to Hlophe, it came as no surprise that everyone went crazy when GenAI was introduced to the global public in November 2022 − through OpenAI-developed chatbot ChatGPT – and has since taken the world by storm.

The increasing number of customers who opt for digital services is leading to significant growth in digital transactions. Other drivers include cost reduction, improving customer experience and customer retention, she pointed out.

“We’re seeing a lot of use cases coming from the drivers of AI. As GenAI AI capabilities are more advanced and can be compared to human qualities, the high level of computational power allows financial institutions to improve productivity enhancements and reporting processes.

“They are gaining value creation, which includes new product development and customer on-boarding and authentication. Regulatory requirements are now also easier to meet with GenAI, because of the opportunity to make the data collection process more efficient and faster.”

Participating in a panel discussion during the event, professor Mark Nasila, chief data and analytics officer at First National Bank’s (FNB’s) chief risk office, said the bank embarked on an AI journey in recent years and is on a continuous innovation drive.

Nasila commented that FNB’s use of AI, machine learning (ML) and GenAI has been mostly prevalent in combating fraud and improving risk management. Other functions include fraud investigations, improving customer experience, flagging problematic documents through AI-enabled ID verification and regulatory reporting.

“ML can learn from experience and AI is capable of processing enormous volumes of data, while recognising patterns and identifying abnormalities that humans cannot, and conducting real-time monitoring.

“This means our teams are now focusing on where real financial crime incidents are, because these models help to rank them accurately, allowing teams to get to decisions much quicker. In the last financial year, fraud AI solutions helped save the bank and its customers over R1.1 billion.”

According to Nasila, the integration of emerging technologies alleviates the burden of time-consuming manual evaluations. “On average, AI saves 70% of analysts’ time by providing a forensic summary ready for a human analyst to evaluate.”

Professor Mark Nasila, chief data and analytics officer at FNB’s chief risk office.
Professor Mark Nasila, chief data and analytics officer at FNB’s chief risk office.

“We’re also able to meet regulatory requirements and make forensic due diligence decisions faster, more accurately and more efficiently by leveraging our internally-developed AI system.

“This use of AI is showing solid returns and freeing up employees to be more efficient. In the last financial year, more than 160 000 investigations were processed using the AI system.”

Hlophe highlighted how Nedbank has improved customer service, added new customers and extended its digital platform services, such as Nedbank insurance, through AI and GenAI.

“One interesting use case is how Nedbank is using the power of AI through implementing Microsoft’s Copilot chatbot. Imagine having a helper to assist you with your work functions? It’s like having ChatGPT for all your Microsoft 365 apps.

“Nedbank is able to streamline processes, mitigate risk, foster innovation and modernise internal working tools,” stated Hlope.

In an interview with ITWeb, Standard Bank group CIO Jörg Fischer said: “Standard Bank works closely with our technology partners to ensure we deliver the best outcomes for our clients through GenAI.

“Our focus is to continue improving the productivity of our employees, particularly benefiting engineers, and in doing so, improve the overall client experience. We have several use cases progressing across the organisation, from back-office to front-office, using AI large language models, to improve the customer experience and employee productivity.”

The bank is working with global technology partners to provide all employees with fundamental and specialised GenAI, he added.

Absa recently told ITWeb TV how it is harnessing the power of AI and natural language understanding to transform the way clients interact with its banking services, by streamlining customer experience and making customer engagements intuitive.

Jörg Fischer, group CIO of Standard Bank.
Jörg Fischer, group CIO of Standard Bank.