Amodu: How AI is Transforming Financial Security in Africa

In an exclusive interview with MARY NNAH, Chief Revenue Officer of Pastel Africa, Anthony Amodu, shares his insights on how artificial intelligence is transforming financial security in Africa. With a focus on innovative solutions for fraud detection and prevention, Amodu discusses Pastel Africa’s cutting-edge technology and its impact on the fintech and banking industries.

Can you share your insights on how AI is revolutionising financial security, and what role Pastel Africa plays in this transformation?

AI is already playing a transformative role in financial security globally. For example, companies such as Stripe, MasterCard, Paypal, JPMorgan Chase and other internationally recognized banks and financial institutions are using AI to prevent fraud and money laundering, bolster cybersecurity, manage identity, and conduct risk management.

Particularly in regions like Africa, where traditional financial systems face challenges such as limited infrastructure, high levels of fraud, and a largely unbanked population, AI has the power to offer solutions to some of these decade-old challenges. Furthermore, AI can automate many of the currently manual processes in order to increase efficiency and productivity.

At Pastel Africa, we are at the forefront of this revolution on the continent, leveraging AI to create more secure, inclusive, and efficient financial ecosystems. We do this by working with our clients to leverage their data to access tailored ML and AI based solutions such as real time transaction monitoring for fraud detection, AML, and credit decisioning engine. We are leveraging local data to build AI models that are robust and responsive to the unique needs of the enterprise players in the continent. For example, we are the first company to offer advanced AI-based models, trained on African user and transaction data, to detect and prevent transaction fraud in real time.

How does Pastel Africa’s partnership with FintechNGR enhance its mission to combat fraud and boost financial security?

Pastel Africa’s partnership with FinTech Association of Nigeria (FintechNGR) significantly enhances our mission to combat fraud and boost financial security by leveraging the collective expertise, support, and innovative ecosystem that FintechNGR provides.

FintechNGR serves as a platform for exchanging ideas and best practices among stakeholders in the financial technology sector. Through this partnership, Pastel gains access to a broad network of fintech innovators, regulatory bodies, and financial institutions, enabling the sharing of insights, best practices, and cutting-edge technologies.

What specific AI-powered solutions does Pastel Africa offer to detect and prevent financial fraud?

Through our Sigma suite of solutions, Pastel Africa offers Transaction Monitoring that empowers financial institutions to detect and prevent fraud in real-time. Our advanced machine learning models analyze thousands of signals, including transaction patterns, customer demographics, and behavioral data, to accurately assess the risk associated with each transaction. By replacing manual, rules-based systems, our AI-driven approach provides a more dynamic and effective solution to fraud prevention. Regular retraining of our models ensures they continually adapt to evolving fraud patterns, keeping your financial security robust and up-to-date.

How do you see the future of financial security evolving, and what innovations can we expect from Pastel Africa?

As financial systems become increasingly digital and interconnected, the need for robust security measures will continue to grow, as fraud also becomes more complex. We can expect a shift towards more proactive and predictive security measures, where financial institutions not only detect threats but anticipate and neutralize them before they occur. As cyber threats become more sophisticated, AI will play an increasingly critical role in identifying complex patterns and anomalies that human analysts might miss.

At Pastel Africa we continue to use feedback from clients, new advancements in AI and ML, future trends and regulatory requirements to improve our solutions. We are exploring innovations that will further enhance real-time fraud detection, leveraging deep learning techniques to improve accuracy and reduce false positives. Additionally, we are also already developing additional solutions, based on our extensive knowledge of the industry and rich databases, that will make financial systems both more secure and user-friendly.

How can the theme of this breakfast meeting, “Transforming Financial Security with Technology: AI Vs Fraud,” contribute to improving Nigeria’s economic growth and stability?

The transformation of financial security with AI is crucial for Nigeria’s economic growth and stability by enhancing trust in financial services. As AI strengthens fraud detection and prevention, it builds confidence in the financial system, encouraging more people—especially the unbanked and underbanked—to engage with formal financial institutions.

For many Nigerians, the fear of fraud has been a barrier to accessing banking services. By using AI to create a more secure environment, we can help break down this barrier, enabling more people to participate in the financial system. This increased participation not only boosts financial inclusion but also drives economic growth, as more individuals and businesses gain access to credit and financial services.

What role do you believe AI-powered financial security solutions can play in reducing corruption and illicit financial flows in Nigeria?

AI-powered financial security solutions can play a transformative role in reducing corruption and illicit financial flows in Nigeria, AI-powered financial security solutions can play a significant role in reducing corruption and illicit financial flows in Nigeria by providing more effective tools for monitoring and detecting suspicious activities. These solutions can analyze vast amounts of transactional data in real-time, identifying patterns and anomalies that might indicate corrupt practices or illegal financial movements.

For example, AI can help track and flag unusual transactions, monitor high-risk accounts, and provide insights that human analysts might miss. By automating these processes, AI reduces the opportunities for corruption to go unnoticed, making it harder for illicit financial activities to thrive.

Moreover, AI can enhance transparency and accountability in financial transactions, making it easier for regulatory bodies to enforce anti-corruption laws. By providing detailed, data-driven insights, AI-powered solutions empower institutions to take swift action against corruption, thereby contributing to a cleaner and more transparent financial environment in Nigeria.

What policy recommendations would you make to regulators and policymakers to support the widespread adoption of AI-powered financial security solutions in Nigeria?

To support the widespread adoption of AI-powered financial security solutions in Nigeria, regulators and policymakers can consider some of the following policy recommendations: Data Infrastructure Development: Improve the data infrastructure in Nigeria to support the effective deployment of AI technologies. This includes investing in high-quality data collection, storage, and sharing mechanisms, as well as ensuring data interoperability across different institutions. Enhancing data infrastructure will allow for more accurate and comprehensive AI models, which in turn can improve the detection of fraud and other financial crimes.

Provide Incentives for AI Adoption: Offer tax incentives, grants, or subsidies to financial institutions and technology companies that invest in AI-powered financial security solutions. This will encourage more entities to adopt advanced technologies and contribute to the growth of the fintech ecosystem.

Support Research and Development: Fund research and development initiatives focused on AI and financial security. Collaboration with academic institutions and industry experts can drive innovation and ensure that AI solutions are cutting-edge and relevant to Nigeria’s financial landscape.

Develop AI Training Programs: Implement training and certification programs for financial professionals, regulators, and technology providers on the use of AI in financial security. This will build the necessary skills and knowledge to effectively leverage AI technologies.

How does Pastel Africa plan to collaborate with government agencies, financial institutions, and other stakeholders to promote AI-driven financial security and economic growth in Nigeria?

Pastel Africa plans to collaborate with government agencies, financial institutions, and other stakeholders in several strategic ways:

Regulatory Partnerships: Pastel Africa intends to work closely together with the relevant agencies to ensure that its AI-driven solutions align with national regulations and standards. By collaborating with these agencies, Pastel Africa can help shape policies that encourage innovation while maintaining financial security.

Capacity Building and Training: Pastel Africa offers training and capacity-building programs. These programs will focus on the latest AI technologies and how they can be leveraged to enhance financial security, improve fraud detection, and ensure compliance with financial regulations.

Joint Innovation Initiatives: By partnering with financial institutions, Pastel Africa aims to drive joint innovation initiatives that explore new ways to apply AI in banking and finance. These initiatives could include developing new financial products, enhancing digital banking services, and improving risk management practices.

Can you share success stories or case studies where Pastel Africa’s technology has effectively prevented or mitigated financial fraud?

While specific case studies and success stories cannot be made public due to confidentiality, we can outline some general examples of how Pastel Africa’s AI-driven technology has helped effectively prevent or mitigate financial fraud.

A growing digital payments platform in Nigeria was facing challenges with fraudulent transactions. Fraudsters were using sophisticated methods, such as phishing attacks, social engineering, and synthetic identity fraud, to exploit vulnerabilities in the payment system, leading to significant financial losses for both the company and its users. Most of these attacks would happen over the weekends or holidays, when the financial institution had limited resources for detecting and stopping fraud. Despite implementing traditional fraud detection systems, the platform continued to experience significant losses and a growing number of customer complaints.

Solution: Pastel Africa implemented our AI-powered fraud detection system that monitored transactions in real-time, and used machine learning to analyze transaction patterns, flagging unusual behavior for further investigation. Our system was able to reduce fraud significantly and help the financial institution differentiate between legitimate transactions and fraudulent ones, even when fraudsters attempted to mask their activities by mimicking regular user behavior. For example, fraudsters often test the system with small transactions using previously dormant accounts before scaling their attacks. Our AI models were able to detect anomalies at the onset, catching the fraudulent behavior before the fraudsters were able to exploit the system further.

What advice would you give to organsations looking to leverage AI for enhanced financial security, and what are the key takeaways you hope attendees will gain from this breakfast meeting?

Advice for Organizations Looking to Leverage AI for Enhanced Financial Security: Identify Key Risks: Begin by identifying the specific financial security risks your organization faces, such as fraud, data breaches, or compliance issues. This will help you focus your AI efforts on the most critical areas.

Define Objectives: Clearly define what you want to achieve with AI—whether it’s reducing fraud, improving transaction security, or enhancing compliance. Having specific goals will guide your AI implementation. Choose the Right Tools: Select AI tools and platforms that align with your organization’s needs and existing infrastructure. Consider scalability, integration capabilities, and ease of use when choosing AI solutions.

Prioritize Data Quality: AI systems rely heavily on data. Ensure that your data is clean, accurate, and comprehensive. Invest in data management and governance practices to maintain high data quality.

Build Partnerships: Consider partnering with AI technology providers and industry experts, especially those that have built solutions using local data. Collaborations can accelerate your AI adoption and bring in valuable expertise.