The merger of Artificial intelligence (AI) And Machine learning (M.L.) ushers in a new era where this dream can become reality. These cutting-edge technologies are proving instrumental in reshaping the financial landscape, creating affordable and practical solutions for all sections of society.
AI and ML enable financial service providers to leverage data and analytics, thereby creating affordable and practical financial solutions for the underrepresented section of society. Even individuals living in remote and vulnerable areas can now access essential financial resources. These technologies are revolutionizing the design and delivery of financial products by packaging and tailoring them to the unique needs and preferences of low-income households, enabling families and businesses in this segment to strengthen their financial resilience and well-being.
AI and ML have played an extremely important role in achieving this goal, with better responses than humans. They are used to identify and target underserved segments, provide personalized financial products and services, automate processes and minimize fraud. Here’s how AI and ML can help realize India’s dream of inclusive financial growth.
Personalized credit assessment: One of the main challenges to financial inclusion is the lack of credit history, especially among the disadvantaged. AI and ML algorithms have the ability to analyze alternative data sources, such as mobile usage patterns and transaction histories, to accurately assess creditworthiness. This innovation allows lenders to offer loans to people previously considered ineligible, thereby promoting financial inclusion.
Digital banking and accessibility: AI-powered chatbots and virtual assistants are becoming the new face of customer service in the financial industry. They provide around-the-clock support, answer questions and guide customers through transactions. This allows individuals across the country, even those residing in remote areas, to access banking services without geographical limitations.Fraud detection and prevention: With the rise of digital transactions, the risk of fraudulent activities has also increased. AI and ML technologies can quickly analyze large data sets to detect anomalies and patterns associated with fraudulent behavior. This proactive approach ensures that individuals and businesses are protected against financial fraud, promoting a safer and more trusted financial environment.Personalized financial advice: AI-powered financial advisory services are democratizing investment opportunities. These services leverage ML algorithms to understand an individual’s financial goals, risk tolerance, and market trends. By providing tailored investment strategies, individuals with different levels of financial literacy can make informed decisions, potentially increasing their wealth over time.
Microfinance and microcredits: For underserved sections of society, microfinance and microcredit can be vital lifelines. AI and ML can streamline the microloan disbursement process by automating credit scoring and risk assessment. This not only speeds up the availability of funds, but also reduces administrative costs, making small loans possible even in remote areas.
Advances in the rural banking sector: Rural areas often lack adequate banking infrastructure. AI-powered mobile banking apps can fill this gap, providing a user-friendly interface for basic transactions. Additionally, predictive analytics can help banks anticipate the financial needs of rural customers, thereby ensuring timely availability of services and products.
Automated investment platforms: AI-powered robo-advisors are transforming investment accessibility. These platforms provide investment recommendations based on individual preferences, risk tolerance and financial goals. They eliminate the need for complex financial knowledge, thereby opening investment opportunities to a wider range of the population.
In the journey towards financial inclusion, AI and ML have the capacity to break traditional barriers and make financial services accessible to all. However, several challenges such as data privacy, regulatory compliance and skills development need to be addressed for a successful transformation. As the nation moves forward, it is essential to balance technological advancement with ethical considerations.
(The writer is founder and CEO of Light Finance)
