In this interview, Sofia Zab, PalmPay’s Global Chief Marketing Officer, discusses how AI is driving financial inclusion, flagging potentially suspicious transactions and fraud risks in Nigeria’s fintech sector with Chinwe Michael.
What technological trends do you see shaping the future of the financial industry in Nigeria, especially now that AI is taking centre stage?
There are many areas where AI can be leveraged to optimise operations and improve existing processes, and that means that companies in the financial industry that adapt quickly and implement AI will have an edge.
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One of AI’s key strengths lies in its ability to analyse vast amounts of data, recognise patterns, and utilise large language models effectively. This capability is particularly beneficial for compliance, especially in transaction monitoring and fraud detection.
AI can also revolutionise customer care through the development of chatbots, providing instant and efficient support. Additionally, it enables financial institutions to offer highly personalised services. For example, AI can optimise loan products and offers to match the specific profiles of applicants. It can also customise apps for individual users, highlighting products and features tailored to each user’s preferences.
Regarding financial inclusion, AI leverages data-driven efficiency and personalisation to serve a broader range of users. This can help companies reach and support more diverse customer bases, ensuring more people can access financial services.
Does Palmpay use AI to understand transaction patterns? If yes, how do you detect and prevent cases of fake accounts, fraud, and cyberattacks?
AI is where the future of technology and computing is heading, and of course, PalmPay is also leveraging it. We use AI technology to help us flag potential suspicious transactions and fraud risks and use it for facial recognition, too.
AI technology helps us flag anomalies in addition to our other automated systems for transaction monitoring. We have manual compliance, risk, and technology teams who follow up on flags, act on accounts, and help train and improve the AI model’s performance over time.
With fraud affecting the financial space and the CBN’s recent lift of a new customer onboarding ban, how is Palmpay ensuring the security of its Application Programming Interface (APIs)?
To ensure the safety of our systems, including our APIs, we encrypt all data and strictly control access rights so that only authorised employees have access. We strictly vet our API partners through a comprehensive Know Your Business (KYB) process before granting them access.
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We are licensed and regulated by the Central Bank of Nigeria (CBN). Our systems adhere to the highest standards and are regularly audited by relevant regulatory bodies and third-party auditors. Our operations enhance Nigeria’s financial infrastructure by offering secure, user-friendly, and inclusive financial services.
While our systems have never experienced breaches or hacks, financial scams are an ongoing issue affecting all major financial platforms.
Scammers often trick individuals into willingly transferring money, making identifying fraudulent transactions at the system level difficult. Our platform provides a 24/7 customer care system and an in-app “Report Scam” feature to combat this. Our dedicated team follows up on reports to freeze transactions and recover funds where possible.
We also actively educate our user base on identifying and avoiding common scams. Additionally, our app includes advanced security features, such as biometric login, PIN confirmation for transactions and profile changes, and the option to hide account balances. These measures provide an extra layer of protection, even if a user’s phone is stolen or personal information is disclosed.
According to the EFinA 2023 A2F survey, the financially excluded adult population stood at 28.9 million. What steps is your company taking to penetrate underserved markets and reach potential customers who are excluded?
Our contribution to driving financial inclusion is to extend financial services to the unbanked and underbanked population. We now have over 30 million users on our platform, and around a third of them report that PalmPay has been their first-ever financial account. That’s a testament to our efforts to reach out to the unbanked population.
We go beyond simply giving people access to basic accounts. The platform has dozens of features, including airtime, bill payment, and other financial services. Financial inclusion is also about making more complex financial products available to a wider range of people. We are removing those barriers to access for the mass market.
Also, a very important way that PalmPay has been able to reach out to the financially excluded population is through our agent network. We have over half a million mobile money agents stationed all around Nigeria, and they collectively serve over 15 million people. In many cases, the agents transact on behalf of their customers. For example, the customers give them cash, and the agent buys airtime for them.
Read also: Fintechs can bridge Nigeria’s financial inclusion gap with mobile money — World Bank
A large portion of those consumers may not even have a smartphone or their financial account yet, so having that ability to have a human connection with someone who can carry out transactions on their behalf is the first step to learning about how financial services work, which would then lead to onboarding directly into the financial system.
Our agents are sensitive to the unbanked population and help to build financial literacy. They train people to sign up and use the app, which offers very quick and easy digital self-onboarding. So, we’ve been very deliberate in designing that onramp for people to join the financial system.
Will AI replace agents?
This year, the GSMA’s annual State of the Industry Report on Mobile Money disclosed how crucial PalmPay’s 500,000 agents have contributed to financial inclusion. They allow the unbanked to onboard onto the financial system at a lower KYC tier level.
Our agents provide that human touch and direct in-person interaction with our customers to help educate them on using the PalmPay app and transacting on their behalf. That cannot be replicated with AI, so we don’t see AI replacing our agents.
However, AI can be very helpful in optimising processes already based on technology. So, chatbots are a perfect example. AI-driven chatbots can handle basic routine inquiries, freeing our customer care team to focus their efforts on more complex issues. That combination helps us have a faster response rate to customer enquiries and, at the same time, be able to give extra attention to issues that need it.
What is the company’s growth vision for the next few years?
Nigeria’s digital and financial landscape has developed hugely in the past few years. Looking forward, we see a lot of potential in this market and will continue to invest in growing our business there.
We will continue to drive financial inclusion, using our agents and the smartphone-based strategy to onboard millions more people onto financial services, increasing their economic participation and improving their livelihoods.
We will continue to help transform and digitise Nigeria’s economy as we grow. PalmPay has been at the forefront of driving the adoption of the cashless payment culture for consumers and the retail sector. We want to build on that and provide our individual and business users with more tools to help them reach their financial goals. In our expansion plans, we are already live in Tanzania and Ghana and will go live in more African markets before the end of the year.
