By Victoria Lindsay, Managing Executive at Innocomm
I recently attended the Seamless Africa Expo in Sandton and one particular theme stood out for me: Artificial Intelligence is no longer the future of fintech, it is here.
From digital lending to biometrics, e-wallets and fraud prevention, AI is fast shaping the way financial services are being implemented and fintech businesses cannot afford to get left behind. Whilst it is an incredibly exciting time for this sector in particular, we must consider whether regulation will keep up with the rapid speed of AI innovation.
A national framework needed
It is undoubtedly a crucial time for regulators and without clear guidance, there is the risk that innovation will overtake accountability. Transparency will need to be the cornerstone of any future national policy framework; where fintechs and financial institutions understand and are educated on the rules of engagement.
In South Africa, the FSCA is set to publish its AI market study at the end of the month. This marks an important step to setting a regulatory baseline. However, a framework alone will not suffice without a solid accountability plan backed by legislation. It will be imperative that responsibility is clearly aligned across data providers, developers, and financial institutions.
Flexible yet accountable
The evolution of fintech has shown us that stiff regulation is often the culprit for halting innovation. African fintechs must continue to advance with the tech, but AI regulation should not necessarily be handled with handcuffs, rather as a safety railing that respects compliance and prioritises consent. Flexibility with accountability is a great place to start. This will require creating frameworks that are continuously reviewed and adapted as technology evolves. There must be accountability to stakeholders for outcomes.
Fairness key for digital banking
Africa has proven to shine in terms of innovation when it comes to digital banking, but AI brings new risks of bias, especially if models are trained on incomplete or skewed datasets. Regulators and fintechs must collaborate, ensuring that algorithms don’t reinforce exclusion, instead extending financial services fairly. As a continent we cannot view inclusion as a by-product, it must be a regulatory requirement.
POPIA, consent, and consumer education
The Protection of Personal Information Act (POPIA) has laid the foundation for data protection in South Africa. Technology has evolved so rapidly with AI forcing us to hone in on questions around consent. Beyond collecting data, the priority now should be educating consumers on how that data powers AI models, where it is being stored, and why it’s being used.
This is especially critical in African markets where many consumers are engaging with formal financial systems for the first time. Building trust with consumers through education is key. The more consumers understand the capabilities and limits of AI, the more confidence they will have in engaging.
Humans at the centre
I am a firm believer that trust starts with a human relationship. No matter how advanced AI gets, decision-making has to remain human at the core, especially when it comes to money matters. Credit approvals, fraud alerts, or account changes should keep a human layer within a process. Beyond the obvious regulatory issues, this is also a matter of upholding dignity and trust. Efficiency should never override empathy.
Audit before deployment, not after
AI systems are advancing too quickly for regulators to play catch-up. Instead of auditing after potential harm has occurred, regulators should be considering pre-deployment assessments to ascertain risk. Testing AI models for bias, data security, and compliance before they scale will ensure issues are identified early on, not when the technology is too embedded to adjust.
Data governance and compliance
Many conversations I had at Seamless Africa were more focused on data. Who owns it? How is it stored? Can it be used across borders? Can consumers withdraw consent? These questions are central to building trustworthy AI.
We cannot sigh and roll our eyes when it comes to compliance. Rather than viewing it as a limitation, we have to respect it as the meeting point of innovation. Fintechs that are transparent about compliance; through dashboards, reports, and consent frameworks are showing their customers, investors, and regulators that they can be trusted. Trust is the ultimate currency.
A collaborative effort key for the future
AI affords us the opportunity to accelerate our continent toward inclusive financial services. But, and this is a big but; only if innovation and regulation move together closely. Policymakers will need to be adaptable, whilst fintechs must never lose sight of human-centric and bias-free systems, and most importantly, consumers need to be empowered through education.
The opportunities are endless, but we must work towards a future where regulation and innovation strengthen one another. Those who can strike this balance will define the next chapter of African fintech.