The Role of AI in Enhancing Financial Inclusion Across Emerging Markets

Generative artificial intelligence or GenAI has been gaining a lot of traction in field of finance. Many firms and startups have already incorporated its benefits into their workflow. Moreover, fintech companies are make full use of the technology to improve customer experience. They are making efforts to deliver personalized financial services to underserved populations, including those in rural areas or regions by making the most of AI. Given the integration of this technology into financial services, let us explore the role of AI in financial inclusion in detail. 

We will be covering how it is having an effect in the microfinance sector and emerging and developing regions. Additionally, we will be taking a look at how it is allowing companies to benefit the customers. Let’s dive in! 

AI in financial inclusion refers to the state achieved when everyone is able to access financial services (like banking, credit, loans, and savings) from their location via AI technology. It allows you to use these services and fulfill your financial goals. Moreover, evolution in this niche in combination with AI developments, has also helped individuals make better use of the companies’ mobile applications. You can observe many customers digitally utilizing AI-powered financial services instead of visiting physical branches, especially in emerging markets. 

A report by the World Bank states its active portfolio includes 6.8 million businesses and people used financial services in 2024. This number is expected to rise to 8.8 million in the upcoming years. If this trend continues, the access of AI in Banking and other sectors will also see a significant surge. It has also caused a similar rise in financial literacy among adults, and the need to approach traditional banks has reduced. 

Since the 2010s, the advent of AI has brought a huge impact on the economies of various countries. The facility of providing basic financial services to customers has been simplified with this technology, be it banking, insurance, or microfinance sector. Let us look at the role of AI in financial inclusion in emerging markets and developing regions.

#1 - AI-Enabled Digital Banking 

AI in the banking sector has prevailed for more than a decade. Many banks and financial institutions have used this technology to provide better customer service, enhance data analytics, and improve customer engagement. For instance, a bank may deploy a chatbot on their website that solves major queries of their customers. Another example is the automated savings feature, which enables customers to save every month automatically, thus eliminating the need for reducing your manual efforts of doing the same. Moreover, AI allows banks to track trends and patterns and mitigate risks associated with offering financial services. Not only that, but financial institutions can also improve their efficiency and speed and innovate new products with the benefits of AI in banking. 

#2 - Enterprise AI Copilot

Ever wondered how enterprises use artificial intelligence effectively for their business needs? Well, an enterprise AI copilot is the answer. It is an interface platform serving as a virtual assistant, working alongside the employees of the organization. An enterprise AI copilot is just like any other employee but AI-powered. It helps users gain more insights on a particular model and identify ways to improvise as well. One of the most significant advantages of having copilot technology for financial inclusion is that it automates repetitive processes within the organization and provides support to employees across different channels and systems.   

#3 - AI-Powered Credit Scoring Innovation 

In the case of traditional credit scoring, organizations use historical data and static variables to determine creditworthiness. This limits the number of persons that can get access to financial assistance. That said, with AI-powered financial services, lenders can provide credit scores of applicants through the utilization of machine learning algorithms. 

This credit-scoring method involves analyzing an extensive range of data points and provides a more dynamic and nuanced understanding of any borrower’s profile. Moreover, this system minimizes human bias in the scoring process by eliminating subjective elements and putting all focus on objective data. Hence, this increases the chance of a person getting access to credit. 

#4 - Exceptional Customer Service through AI 

Traditional banks always had a long waiting queue. In other words, customers had to wait a significant amount of time before they could personally talk to the bank’s staff. In this process, sometimes, customers had to keep an extra day to fulfill their financial queries. However, with AI in financial inclusion, the need to hire extra staff to cater to customer queries is minimized. Financial institutions can deploy bots and AI features that handle basic customer inquiries and provide instant responses in return. Moreover, the AI bot can also assist with tasks such as product recommendations and troubleshooting. In case the query is not solved with the bot assistant, an executive can take over to provide a solution as soon as possible. 

#5 - Empowering Microfinance 

The microfinance sector has a lot of financial impact on the rural and backward regions of the economy as it offers small loans, insurance, and other services to individuals earning low income. Such services help the individuals improve their standard of living and start businesses. 

With AI-powered financial services, it is possible to cater to this sector better and fulfill the demand of financial services. This is because the financial institutions can leverage AI technologies for credit scoring, automation, data analytics, etc., which, in turn, unlocks opportunities for financial inclusion, thus empowering communities and individuals across the world. 

#6 - Risk Assessment and Fraud Detection 

In today's time of recurring frauds and scams, assessing risks and detecting them in advance can help prevent them. The process involves analyzing large data sets and looking for patterns signaling upcoming fraud. While financial institutions like banks use historical data to conduct the assessment, AI can help monitor transactions and user behavior on a real-time basis. This can help ensure that banks get immediate alerts when suspicious activity is detected. 

Like banks, even insurance companies can leverage AI to analyze extensive data and spot claim patterns, identify suspicious claims, and potentially fraudulent activity. Once detected, these firms can further take measures that can mitigate the risk. They can also develop products that can solve these problems.  

Artificial intelligence has formed the foundation for many financial institutions to develop and cater services to customers across different communities and markets. From customized credit scoring and fraud detection to enhanced mobile banking and financial literacy tools, AI offers innovative ways to better fulfill the requirements, particularly concerning financial services. And it has also helped develop literacy levels among customers. Even the rural and developing regions have benefitted from the use of AI in financial inclusion. 

However, before leveraging the latest AI technologies, careful consideration of compliances, data privacy, and regulatory frameworks is necessary. If deployed properly, financial inclusion in emerging markets can boost the performance of various financial services companies, further paving the way for a more equitable and prosperous future for millions.