- Banks across Africa investing heavily in AI.
- Private sector required to increase digital innovation
- Cyber security market growing rapidly.
Banks in Africa are moving beyond basic digital transformation and choosing all out automation, investing millions of dollars in AI technology. According to disclosurers, Absa Bank Kenya has injected USD31 million in technology investment to automate 71% of its processes shifting nearly all customer transactions to digital channels.
According to the bank, 94 percent of its customer transactions are now completed through digital and alternative channels. In its latest sustainability report the bank says fit is using automation, cloud infrastructure and artificial intelligence to reduce costs, overall, routine banking is moving away from physical branches to online services.
“It’s about the deliberate alignment of technology, compliance framework, and market strategy,” reads the report.
Next door in Tanzania, mobile money transactions now exceed USD 79 billion and real-time payment volumes continue to double year on year, reports TechaFinance.
“Behind the scenes, banks are investing heavily in infrastructure designed not just to process payments faster, but to extract insight from the data those payments generate,” it writes in the report titled ‘How Tanzania’s Banks Are Preparing for the Coming Wave of AI-Driven Financial Services.’
They are laying the foundations for artificial intelligence (AI) to detect fraud, automate operations and personalise customer experiences, all while defending against a surge in cyber-attacks targeting financial institutions across East Africa.
The report also cites the parallel need for stronger digital defences; “Tanzania’s cybersecurity sector was projected to generate USD60.93 million in revenue in 2025, with expected growth of 9 percent by 2030, signalling unprecedented enterprise investment in digital protection.”
This growth is boosting the data security market which deals with technologies, solutions and services designed to protect digital information from breaches, theft and corruption.
For example, preserving the confidentiality, integrity and availability of data, is a strategic priority for financial institutions. “For banks, this shift is as much about resilience as innovation. Fraud detection, identity protection and uninterrupted service delivery all depend on systems capable of processing vast data volumes at low latency,” the report details.
Banks in Africa step up measures to counter fraud
As a result, banks like Absa, are increasingly building infrastructure closer to key payment networks and digital channels to enable real-time decision making to reduce fraud and improve general operational uptime.
Meanwhile, risks abound. According to Tanzania Communications Regulatory Authority (TCRA), attempted digital fraud cases rose by over 30 percent in the first quarter of this year, underscoring the need for more intelligent monitoring systems.
However, policies and laws affect application of digital solutions, for example in Tanzania, regulations require financial data to be hosted locally; “This can limit the use of global hyperscale cloud providers, making it difficult to manage massive datasets for complex AI models,” the report goes on to detail.
According to the report, countries like South Africa have mature cloud market working with major providers, but the rest of the region lacks high capacity local data centres. “This can result in challenges with latency, cost, and compliance…because AI needs reliable, high-performance infrastructure,” the report notes.
“A powerful AI tool is useless if it cannot seamlessly connect with your Core Banking System (CBS) and other legacy platforms,” it details.
To address this gap, there is a general rise of open banking APIs, championed by institutions like NMB Bank in Tanzania. In Kenya, the Co-operative Bank has integrated more than a dozen APIs to enable third-party fintechs and the Central Bank of Kenya has what is known as the Open Finance Initiative, a regulation platform designed to support secure API sharing.
However, the report underlines the fact that; “Innovation in Africa has often outpaced regulation, creating uncertainty…For a bank’s leadership, navigating this ambiguity around data sovereignty, algorithmic transparency, and ethical AI use is paramount to building trust and ensuring long-term viability.”
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Africa banks: Fraud risk increase forcing market growth
Meanwhile, as fraud risks and operational complexity increase, banks are now embedding AI models directly into their transaction and payment processing systems.
This move is driving the transition to cloud computing and adoption of AI tech in banks. To operate effectively, these models require reliable computing capacity, low latency connectivity and resilient backup infrastructure, and all of which must operate within a tightly governed regulatory environment.
That been the case, public private partnership cannot be avoided because on one hand there is need for private sector investment in technology while on the other, governments must enforce favourable policies.
The tech report says AI driven fraud detection rests on three core infrastructure elements, edge computing enables suspicious activity to be flagged in milliseconds, then robust interconnectivity between banking platforms, telecoms networks and national payment switches reduces latency and improves cross-platform visibility. Thirdly, secure data storage supports both real-time analytics and the historical datasets that are needed to train and refine AI models.
For example, for Tanzania’s regulatory framework, the Data Protection Act (2022) defines how personal and financial data must be collected, processed and stored, including consent requirements, protections for sensitive and biometric data, mandatory security controls, breach notification obligations, and rules on data localisation and cross-border transfers.
“Together, these provisions reinforce the need for strong local hosting, governance and auditability,” the report goes on to note.
It further notes that; “From a financial services perspective, the Bank of Tanzania (BoT) sets expectations around risk management, outsourcing, ICT governance and business continuity, extending to digital platforms, third-party providers and emerging technologies such as AI.”
Tanzania also set the ‘Cloud Computing Guidelines’ which requires banks to among other things, retain full accountability for security, resilience and regulatory access.
“Crucially, mission-critical systems and sensitive customer data must be hosted within Tanzania,” the report further details.
It also cites that, it is for this reason that banks are shifting from purely centralised data-centre models toward hybrid architectures that combine local hosting with tightly controlled cloud resources, enabling AI adoption at scale while maintaining compliance and operational resilience.
The report authors also encourage a deep understanding of national data protection Acts, and building frameworks for ethical AI use, the bedrock of a trusted financial institution.
“With the rapid growth of technology, there is a real risk of widening the digital divide, leaving behind women, rural communities, and the youth,” the report points out.
