The study further reveals that AI is driving faster and more accurate decisions, personalised offers, and instant access to support.

Francois Grobler, the chief of Decision Analytics at Experian Africa, has this to say;

“Today’s consumers have more options and less patience than ever before. In this highly competitive landscape, we believe that high-quality digital customer experience provides a competitive advantage and our latest research explores how AI is turbocharging this process.”

The research shows that AI and Machine Learning (ML) can significantly improve the accuracy of models used to assess creditworthiness and affordability.

This improvement leads to more inclusive lending and more personalised terms based on a better understanding of behavioural insight into financial circumstances.

Grobler adds,

“Our AI-powered solutions are not only helping businesses make faster and more accurate decisions but also enhancing fraud detection. We’re seeing great strides in identity verification, virtual assistance, automated onboarding, and early warning systems for vulnerable customers.”

Experian’s research indicates that the top two customer onboarding priorities for 75% of senior leaders are investing in new data sources to better understand risk and affordability, and implementing a fully digital customer experience.

“Access to data alone is not enough to improve creditworthiness and risk assessment. Having the right AI tools to analyse this data and turn it into actionable insight is a critical next step,” he adds.

The crucial role of cloud technology in unlocking AI potential

As many Financial Services and Telcos look to improve the accuracy of their credit risk and fraud models through the adoption of AI, cloud has become an essential enabler of this process.

The performance uplift provided by AI is dependent on the ability to link and collate data from multiple sources in a fast and secure way.

Cloud makes it easier to connect data feeds, allowing different internal departments to safely work with data from a variety of sources.

Grobler explains that cloud provides the computing capacity required to ingest and manage the high volume of data that is needed for AI and ML.

It provides the flexibility and scalability to enable the software capabilities needed to develop, deploy, and operate models, which ultimately integrates AI into the credit decisioning process.

According to the research, investing in Software-as-a-Service (SaaS) and cloud technology is a top priority for nearly 4 out of 5 senior decision-makers (79%).

This is unsurprising in light of the benefits that cloud provides – such as improved security, faster processing power, reduced maintenance costs and the elastic flexibility to scale as required.

AI is undoubtedly enhancing our ability to assess creditworthiness and prevent fraud. But taking advantage of the improved accuracy that AI models deliver requires a solid cloud foundation from both an infrastructure and software viewpoint.

“As the race to reduce risk and provide faster digital decisions is turbocharged by AI, the adoption of cloud becomes an essential stepping-stone in realising AI’s potential”, concludes Grobler.

These sophisticated technologies can be used for multiple purposes, benefiting both companies and customers alike.

Advanced analytics help businesses improve their operations by increasing task automation, reducing human error, and more importantly, enhancing the ability to analyse and interpret vast amounts of data.

Research published in Experian’s 2022 Business and Consumer Insight Report found that 62% of companies believe that AI and ML are already radically transforming the way they do business.

Improved business performance translates as the ability to drastically improve the accuracy of models and deliver a more convenient and personalised customer experience, which is of paramount importance in an increasingly digital world.

The challenges of advanced analytics

Francois Grobler, Chief of Decision Analytics at Experian Africa says that building the expertise, knowledge and infrastructure necessary to reap the benefits of advanced analytics can pose problems for many businesses.

The increased IT complexity required to manage AI and ML was pinpointed as the biggest challenge by 48% of businesses in Experian’s latest report.

Explainability is another issue that needs to be addressed. As companies accelerate the adoption of advanced analytics, they must ensure the outcomes produced by AI and ML can be understood by those providing regulatory oversight as well as being able to explain to customers why a specific design has been made. Tellingly, almost a third of businesses stated that the explainability of complex ML models is a major challenge. Given the complexity of the processes underlying advanced analytics, ensuring transparency and explainability in AI and ML is not an easy accomplishment – but when done right it can greatly improve the accuracy of creditworthiness and risk assessments.

“The third key challenge businesses are facing is integration. While AI and ML can support businesses in finding new solutions to problems, integrating them into pre-existing systems is causing headaches for some. Embedding ML requires scalable computing power and having sufficient infrastructure to enable it,” says Grobler.                    

The solutions to the challenges

How can Financial Services and Telecoms providers overcome the challenges of AI and ML to maximise their benefits? Implementing the three tips below is a good place to start for businesses looking to harness the power of advanced analytics.

“Upskilling teams on the multiple facets of advanced analytics is crucial. By upskilling their teams in AI and ML, businesses can build an analytics team that can maximise the use of advanced analytics to improve operational performance. At the moment, the gap in IT expertise is currently one of the main impediments to a wider and more effective adoption of these cutting-edge technologies,” adds Grobler.

“Training workers in AI and ML is not a one-day activity but a long-lasting investment, as advanced analytics is evolving at a relentless pace, with new regulation being implemented to bring governance to its use. This means that companies need to provide continuous training, empowering employees to keep up with the latest advancements in the sector.”   

Second, businesses need to be smart about where to drive investment. Grobler says that scalable computing power greatly contributes to the effective functioning of ML and should be prioritised.

Experian’s report reveals that Financial Services and Telecoms providers recognise the importance of this factor. 79% of the companies that have already invested in cloud-based software applications stated that access to more computing power was a major reason for deciding to make such investments.

“And finally, the easiest way for companies to take concrete steps towards a better implementation of advanced analytics is by establishing partnerships with organisations that can provide expertise in AI and ML – both the technology and the regulatory requirements. It can be daunting for any business to master every aspect of advanced analytics. Forging the right partnership can help them find direction in this broad and complex area, complimenting and supporting existing analytics teams,” he adds.          

The promise of a new world of opportunities

According to Grobler;

Overcoming the challenges of advanced analytics will require patience and commitment from Financial Services and Telecoms providers. Yet by leveraging the opportunities that AI and ML uncover, they can transform the way they do business and significantly enhance their performance.

“For instance, advanced analytics enables businesses to turn large volumes of data into actionable insights. This, in turn, will help them achieve faster time to market for the testing and deployment of new credit risk and forecasting models.

“Businesses that can unleash the full power of advanced analytics will be best placed to reap the rewards. For more insight into the opportunities and challenges involved with AI/ML download Experian’s latest report,” he concludes.