Does AI Drive Financial Inclusion By Automating Tasks and Offering Accessible Tools?

TechRound Team

4 months ago

—TechRound does not recommend or endorse any trading, investment or other financial advice or practices. All articles are purely informational—

Imagine a world where everyone, no matter where they live or how much they earn, can access essential financial services. This dream of financial inclusion is becoming a reality for millions, thanks to Artificial Intelligence (AI).

For years, financial exclusion has kept many communities from participating in the global economy, largely due to challenges like poor infrastructure and high service costs. But AI is changing the game. By automating routine processes and introducing user-friendly financial tools, it’s making banking, lending, and saving more accessible than ever.

The Challenges of Financial Exclusion

For many people, accessing basic financial services isn’t as easy as walking into a bank. Here are some of the biggest obstacles they face:

Living in Remote Areas: Rural communities often lack physical banks or ATMs, making financial access a logistical nightmare
High Banking Costs: Traditional banks frequently prioritise wealthier clients, as serving lower-income groups can be expensive
Low Financial Literacy: Many people simply don’t understand how banking systems work, which keeps them from using these services

These challenges have left billions around the world unbanked or underbanked. But AI is stepping in to break these barriers.

How AI is Solving the Problem

AI is proving to be a powerful tool for expanding financial access. Let’s break down how it’s making a difference:

1. Automating Everyday Banking Tasks

AI is taking over repetitive processes, making financial services faster and cheaper. Here’s how:

Chatbots for Instant Support:
- AI-powered chatbots can help customers open accounts, check balances, or process payments, often in their native languages
- For instance, fintech companies in regions like Africa and Southeast Asia use chatbots to offer round-the-clock support
Speeding Up Loan Approvals:
- Traditional loan processes are slow and often biased. AI uses data, like mobile phone usage or bill payment history, to quickly and fairly assess someone’s creditworthiness
Simplifying Identity Verification:
- Tasks like verifying IDs and documents (part of the Know Your Customer process) are now faster with AI tools that scan and analyse data in seconds

2. Educating People About Finance

Financial literacy is key to inclusion, and AI is making education more accessible and relatable.

Personalised Learning Apps:
- AI-powered apps deliver easy-to-understand lessons on budgeting, saving, and investing. Many are customised to match the user’s language and financial experience
Interactive Tools for Beginners:
- Virtual assistants guide users step-by-step through financial processes, like setting up a savings plan or understanding how loans work

3. Revolutionising Microfinance and Lending

Microfinance institutions are using AI to reach underserved communities with smarter lending options:

Fairer Credit Assessments:
- AI doesn’t rely solely on traditional credit scores. Instead, it evaluates alternative data like farming activity, business transactions, or even social media patterns
Quicker Loan Processing:
- Borrowers don’t need to wait weeks for a decision. AI streamlines the process, helping people get the funds they need sooner

4. Making Digital Payments and Banking Accessible

AI is helping millions make the leap from cash to digital finance:

User-Friendly Mobile Wallets:
- AI-driven apps like Monzo and Revolut in the UK offer simple, secure ways to save, spend, and transfer money; perfect for first-time users
Better Fraud Protection:
- AI constantly scans transactions to detect and stop fraud, giving users confidence in digital banking

Real-World Success Stories

AI isn’t just a futuristic concept, it’s already making an impact worldwide:

M-Pesa:
In Kenya, this mobile payment platform uses AI to process transactions for millions, even in remote areas without banks.
Tala:
This fintech company offers small loans in regions like Asia and Africa by analysing alternative credit data with AI.
UK-Based Fintech Apps:
Apps like Starling Bank use AI to personalise banking experiences, helping more people take control of their finances.

Does AI-Driven Inclusion Matter?

Here are the key benefits of AI in financial inclusion:

Lower Costs: Automating processes reduces operational expenses, making it profitable to serve lower-income customers
Greater Accessibility: With AI-powered digital tools, financial services are now reaching people in the most remote corners of the world
Empowerment: By simplifying finance, AI gives individuals the knowledge and confidence to manage their money better

Challenges That Need Attention

AI is powerful, but it’s not without flaws. Here are some areas that need improvement:

Bias in AI Systems: Algorithms can unintentionally favour certain groups if not designed carefully. Developers need to use diverse, representative data
Data Privacy: With so much sensitive information involved, protecting user data must be a top priority
Digital Barriers: In areas with poor internet or low digital literacy, using AI tools can be challenging

The Future of AI in Financial Inclusion

Looking ahead, AI will continue to shape the financial landscape:

Decentralised Finance (DeFi): AI combined with blockchain technology could create more inclusive lending and payment systems
Smart Financial Devices: Imagine wearables or IoT devices that give real-time financial insights
Collaboration Across Industries: Governments, banks, and tech companies need to work together to scale these solutions responsibly

AI has the potential to make financial inclusion a reality for everyone, regardless of where they live or their financial status. By automating processes, creating accessible tools, and fostering financial literacy, it’s giving people the opportunity to participate in the economy and improve their lives.

As this technology continues to evolve, collaboration between governments, financial institutions, and tech developers will be crucial to ensure that AI-powered solutions are ethical, inclusive, and impactful.