Can AI Improve Financial Inclusion? – Jammu Kashmir Latest News | Tourism
India does not have the most financially independent population. A large percentage of the population here does not even have a bank account. So you can confidently say that financial inclusion is seriously lacking in our country. Financial inclusion is when every individual in a country is provided with equal access to all financial services, regardless of their background. Artificial intelligence’s role in financial inclusion is that it is a system with no biases and can be considered fair. But even with AI entering the picture, how far can a country go to provide everyone with financial equality?
AI fairness in today’s world
Artificial intelligence is already being used in many sectors to optimize sales and transactions. For example, AI provides security to avoid fraud and ensure a secure payment gateway. In addition, when it comes to spending online, AI also registers your spending habits and uses that information to provide you with suggestions that better fit your budget.
The rise of AI in the financial sector shows how well it is adapting, even in the most traditional industries. Anyone who aspires to succeed should enroll in an artificial intelligence program.
Explainable AI for financial inclusion
When the data handled is sensitive, the lack of trust comes automatically. Therefore, transparency is crucial to building customer trust and providing assurance. This is where explainable AI comes into play.
Explainable AI, also known as XAI, is a developing field that gives banks and financial institutions more clarity about their AI management. The goal of XAI is to improve the explanation, use and understanding of artificial intelligence for everyone. An explainable AI will be easy to understand while remaining precise and effective.
It helps because it makes AI understandable to everyone and eases the financial hurdles that people have faced and encourages more people to take control of their finances.
Drivers of AI Disruption in Finance
Change happens slowly, and it happens from within. For artificial intelligence to impact an entire industry, it needs to have some powerful drivers.
The customer’s expectation shifts with any new technology. So when big data comes into the picture, it has a significant impact on the financial sector. Customers can now interact with their banks on a more digital level. Their data is collected digitally through various platforms and is analyzed in a completely secure way.
With AI, large volumes of unstructured data can be collected and used to make better decisions in a business.
Another reason why large amounts of data can be processed so quickly is cloud computing. The overall development of infrastructure and resources made the entire process efficient and helped to lower the overall cost.
If nothing else, this suggests that everyone should realize that businesses are more willing than ever to use AI.
Regulators are putting pressure on banks to submit accurate reports on time. This is part of the banks’ legal obligation; therefore, the process must be carried out on time. The process for regulatory compliance includes gathering data from various sources.
With the help of artificial intelligence, this entire process is automated. This increases the speed and quality of decision-making while addressing problems in the financial systems.
Every bank wants to provide the best customer service to their users, so they are constantly competing with each other. However, with FinTechs becoming more and more popular, competition from traditional financial organizations has become a bit tougher.
AI has become the cutting edge technology that many businesses in the financial sector are using to stay ahead of the competition.
How will AI improve financial inclusion?
We know that artificial intelligence improves the financial inclusion situation. This affects various sectors in the BSFI industry. Here’s how AI is improving the industry:
Credit risk management
Financial institutions need to create more reliable models to create a plan against risk management. You can already see Fintechs and Digital Banking markets using AI to help with credit risk management.
For banks, customer relationship management is crucial. This is why more and more banks now offer more individualized, 24-hour services to each of their customers. Additionally, users now have the ability to connect to banking apps using facial recognition and voice commands due to AI.
Security against fraud
Banks have always depended on anti-money laundering (AML) transaction monitoring and name screening systems. Unfortunately, most of these systems are based on old rules and produce many false positives. However, enhanced AI components are now being added to the existing systems to identify previously undetected transactional patterns.
So yes, AI can address the long-standing issue of financial inclusion and help improve the situation. First, however, banks and financial institutions must be open to adopting this new perspective and reinventing many of their old policies.
India will be a financially inclusive country only when everyone is assured of safety and efficiency.