Kenyan banks are increasingly turning to artificial intelligence to address a growing problem of loan defaults, as bad loans reach a 20-year high. Financial institutions are now using AI and alternative data sources to detect potential defaults earlier, aiming to stabilize their balance sheets. This shift comes as the country faces mounting pressure from a deteriorating economic climate and rising borrowing risks.
The use of AI in credit assessment allows lenders to analyze a broader range of data points, including digital footprints and transaction histories, which can provide a more accurate picture of a borrower’s financial health. This approach is expected to reduce the number of defaults and improve overall lending efficiency. Experts suggest that the technology could also help banks tailor their services more effectively to individual customers.
By integrating AI tools, Kenyan banks hope to not only mitigate financial losses but also enhance their resilience in the face of economic uncertainty. The strategy reflects a broader trend in the financial sector to leverage technology for better risk management and customer engagement. (theeastafrican.co.ke)
