How Artificial Intelligence Can Revolutionize Financial Inclusion

Artificial intelligence is a transformative force for microfinance and the financial inclusion sector. It has the potential to make financial services more efficient, faster and more responsive to client needs. In Africa, the growth of AI is boosted by increasing connectivity as well as the widespread adoption of mobile money. 

To discuss the opportunities and risks associated with integrating AI into financial services, especially in the African region, Portail FinDev (French FinDev Gateway) and MicroSave Consulting hosted a webinar on 3 Dec 2024: “Concrete Applications of Artificial Intelligence in Financial Inclusion.” Moderated by Elisabeth Kibitek, Associate Partner at MicroSave Consulting, the discussion featured the experiences of regional industry experts:

• Thomas Carrié, co-founder of Rubyx, a fintech that develops AI-based services and provides technological tools for key data uses such as credit scoring and automated decision-making.
• Yacouba Kone, Operational Risk and Credit Manager at Advans Côte d'Ivoire, who has integrated AI algorithms into its processes for automatic renewal in order to respond more quickly to customers' credit needs, but also to anticipate their credit needs. 

Below, we share the key points that were discussed during this event.

Artificial intelligence as a powerful lever for financial inclusion

Artificial intelligence is redefining the way financial services are designed and delivered. It enables FSPs to respond more specifically to customers’ needs, especially those who are under-banked or unbanked. Benefits include: 

• Increased product personalization: Through algorithmic data analysis, financial services can be tailored to micro-entrepreneurs, small businesses and individuals in a variety of contexts. For example, AI-assisted portfolio management involves developing personalized investment advice based on customer data and the preferences of customers and financial institutions.
• Simplified access to credit: With AI, financial institutions can assess risks more reliably, even for customers without a credit history. For example, AI supports the development of predictive algorithms to enable the use of alternative data in credit scoring.
• Optimized processes: Automating tasks such as credit assessment reduces time and costs, while improving accuracy. The use of chatbots, for example, can enable an FSP to provide 24-hour customer service at a much lower cost.
• Fraud detection: AI enables the continuous identification of suspicious transactions, improving the security of financial operations. 

Challenges in integrating artificial intelligence in microfinance

Despite its potential, integrating AI into MFI operations is not without its challenges:

• Access to quality data: In many regions, the data needed to train AI models is fragmented or insufficient, which can limit AI’s effectiveness.
• Algorithmic bias: If the data used contains biases, the results produced risk reflecting or amplifying discrimination.
• Financial data protection and privacy compliance: As financial institutions collect more and more sensitive information, ensuring its security becomes a top priority.
• Implementation costs: Introducing AI can be expensive, especially for small institutions that won't see a quick return on investment. 

Collaboration for an ethical and impactful use of AI

To maximize the impact of artificial intelligence on financial inclusion, the webinar experts stressed the importance of collaboration:

• Financial institutions must modernize their tools to meet the growing needs of their customers. They should integrate AI into their management strategy and service offering in order to reduce their costs and improve their reach.
• Fintechs, which are at the forefront of innovation and technology and have the capacity to develop efficient solutions, must continue to innovate and design solutions adapted to local contexts and the specificities of the African market.
• Regulators have a crucial role to play in creating regulatory frameworks that encourage innovation while protecting users. They must remain vigilant in creating standards for the ethical use of AI. 

Indeed, the future of AI in financial inclusion relies on responsible practices, involving:  

• Ethical use of data to avoid bias and protect users' privacy.
• Continuous training of MFI teams to maximize the opportunities offered by AI and improve their ability to accept change.
• Collaboration with local communities to design solutions that are truly tailored to their needs. Service providers must put themselves in their customer’s shoes and consider what would improve their experience compared to the current offering. 

Harnessing AI to make financial services more inclusive

The webinar showed that AI is a real force for change that can help make financial services accessible to all. However, to fully leverage its potential, it is crucial that the financial inclusion sector collaborates to jointly address challenges related to data, transparency and security, as well as ensuring that the use of AI is paired with a human presence. Together, we can bring about the desired results: ethical artificial intelligence that powers financial services and makes them more inclusive. 

To learn more, watch the full webinar (in French).