Al helps SA banks turn the dial on the informal economy

While banks experiment with generative Al, Capitec is tailoring overseas models to the realities of informal economies, and Microsoft is taking over the back office

- By Lindsey Schutters

South African banks are going deep on artificial intelligence (AI).

Fraud detection, customer service bots and predictive analytics are the new battlegrounds for the Big Four. But look past the hype and you'll see that Capitec is bending AI into shapes its American and European inventors never imagined, because South Africa's risk profile is unlike anywhere else.

"A lot of these models come in from overseas and they're based on things that actually don't work here," Capitec chief technology officer Andrew Baker told Daily Maverick during a media roundtable at the AWS (Amazon Web Services) Summit in Joburg last week.

"In the South African theme market, traditional creditworthiness models mean most people will fail. We can't just copy-paste those assumptions."

Instead, Capitec has been tinkering at the edges of micro-lending, using what Baker calls "micro-decision lending". Something as small as a R10 airtime advance becomes a test of trust: if clients repay promptly, the bank system knows it can scale up the offering.

It’s a deliberate rejection of the blunt-force credit scoring tools imported from global financial hubs, and it shows how AI can be used to open doors rather than slam them shut.

This approach matters in a country where millions remain "thin file clients" - people with no formal credit history who would usually be invisible to conventional lenders. This is what it takes to bank the unbanked, even if it means starting with tiny loans to street vendors or first-time earners.

"AI lets us democratise credit," Baker said. "It's about applying logic to lend responsibly where others see only risk."

Fighting fraud with algorithms

If micro-lending is Capitec's offensive play, fraud detection is its defensive wall and, here too, AI is directing the backline.