Joseph Isangura
East Africa’s financial sector is experiencing a technological shift as banks increasingly adopt artificial intelligence (AI) to address persistent challenges in cross-border payments.
While these advancements have enhanced speed, efficiency, and fraud prevention, high transaction costs remain a major hurdle.
AI is now at the forefront of combating payment fraud. By analyzing transaction patterns, AI tools can detect irregularities and block suspicious activities in real-time without human intervention. This ensures safer transactions for users across the region. Beyond security, AI is improving customer experiences by tailoring services to individual needs. For example, frequent travelers may receive recommendations for travel insurance, while traders between countries can access tailored financial products to ease their business operations.
Despite these innovations, the high costs associated with cross-border payments persist. Transactions between East African countries, such as Tanzania and Uganda, can attract fees as high as 50% of the payment value, with delays in settlement adding to the inconvenience. The region’s payment corridors are among the costliest globally, raising concerns for businesses and individuals alike.
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Some progress has been made through partnerships between banks and fintech firms. Recent initiatives, like the collaboration between a digital wallet provider and a global payment network, have introduced faster and more affordable solutions for money transfers across borders. These partnerships are leveraging digital technologies to connect users to more efficient payment systems, benefiting both consumers and entrepreneurs.
However, addressing the cost issue fully will require a combination of innovations, policy reforms, and investment in regional financial infrastructure. The East African Community’s push for regional economic integration provides hope for more streamlined and cost-effective payment systems in the future.
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