Equity Bank to Fully Digitize Lending Services by Mid 2018 with Key Focus on AI

Equity Bank CEO, Dr. James Mwangi

Equity Bank CEO, Dr. James MwangiEquity Bank announced its performance for FY 2017 during the investor briefing earlier this morning.

At the event that was steered by the Group’s CEO Dr. James Mwangi, it emerged that the bank is working hard to transition its services to a digital platform in an effort to streamline its business. This development was echoed by the fact that 96% of the institution’s transactions were made outside branches. In particular, its MVNO, Equitel that is managed by Finserve continues to showcase dominance as it registered 54% of out-of-the-bank transactions. Eazzy Banking App came in second on the list with 20%, followed by Agency Banking at 14%.

Notably, Eazzy Banking, which had zero presence in 2016 has grown tremendously to demonstrate the essence of using digital services. At the same time, the bank mentioned that 94% of dispensed loans were processed through digital channels. Furthermore, the bank is in the process of digitizing corporate loans by June, which will also mark the conclusion of their digital strategy.

When asked about the motivation behind digitization, Dr. James Mwangi echoed the bank’s plan in taking advantage of all kinds of improvements to bolster its product offering, which covers several aspects of analytics and artificial intelligence (AI).

In regard to analytics, the bank studies how customers perform banking functions by using big data tools to gain better visibility into customer behaviour that includes the probability of risk. Analytics, in this case, include various data sources such as social media usage, access to external bureaus and other lenders, to mention a few. By doing so, Equity gauges performance. Additional analytic processes include psychometric testing where the bank uses digital tools to assess a customer’s entrepreneurial skills based on data they have on their phones. It is a process that aims to improve credit scoring in the long run.

It should be noted these developments go in line with digital requirements that are characterized by disregard of traditional credit scoring techniques that are simply not enough. Using AI, Equity believes it will continue to improve underperforming loans metrics in a bid to optimize risks versus returns for each loan deployed.

By June 2018, Equity customers will be beneficiaries of AI as far as lending is concerned. In other words, creditworthiness will be pegged on Big Data especially to the folk without credit histories. The tool will be used to streamline the loan process, in addition to improving customer experience for borrowers.

We are not sure of the bank’s plans because advances in AI and Big Data do not mean the bank will able to give out loans without human intervention. For instance, security issues are a big concern, not to mention confidentiality issues that emerge from the mode of operation of AI.

For instance, the use of apps such as Eazzy Banking that access large amounts of data based on mobile usage habits may not augur well for the privacy-conscious people. At the same time, the use of AI to generate credit score may clash with other credit platforms.