Artificial intelligence and blockchain technologies are transforming regulatory compliance across Sub-Saharan Africa's financial sector, with 62% of institutions now deploying AI-powered anti-money laundering systems, according to a new industry report by Regtech Africa.
The adoption of AI-enhanced compliance tools has led to dramatic improvements in risk detection, with transaction monitoring systems now processing over 850 million transactions monthly while reducing false positives by up to 70% compared to traditional rule-based approaches.
South Africa's Absa Group exemplifies this trend, achieving a 77% reduction in false positives through AI-enhanced fraud detection systems. Meanwhile, East African banking group I&M has partnered with ThetaRay to implement AI-powered compliance across its operations in Kenya, Tanzania, Rwanda, Uganda, and Mauritius.
Regional Integration Accelerates Technology Adoption
The African Continental Free Trade Area Digital Protocol, approved in February 2024, is driving harmonization of digital regulations across the continent. The Pan-African Payment and Settlement System has expanded to 18 countries and 52 commercial banks, enabling real-time cross-border payments in local currencies.
Blockchain adoption is also gaining momentum, with 23% of regional banks exploring pilot programs and eight central banks studying blockchain for central bank digital currency infrastructure. The South African Reserve Bank's Project Khokha has demonstrated the technology's potential for wholesale interbank payments.
Cloud and Biometric Solutions Show Strong Growth
Cloud-based regtech solutions now account for 60% of implementations, up from 42% in 2022. In the digital identity space, 78% of digital banks have adopted facial recognition for customer onboarding, while fingerprint authentication has been integrated into 12 national ID systems.
Regulatory developments are further accelerating adoption, with Nigeria requiring mandatory linkage of Bank Verification Numbers with National Identification Numbers, and South Africa issuing over 70 licenses to crypto service providers in 2024.
