The Impact of AI on Financial Inclusion and P...

The Impact of AI on Financial Inclusion and Poverty Alleviation, Particularly in Rural and Underserved Areas

Author Name : Venkata Vijay Krishna Paruchuru, Aneesh Kumar Perukilakattunirappel Sundareswaran, Shantanu Bindewari

ABSTRACT The role of Artificial Intelligence (AI) in inclusive finance and poverty reduction, particularly among rural and marginalized communities, is now the focus of growing attention and innovation. While AI has been demonstrated to increase access to fundamental financial services like credit, insurance, and digital payments among these communities, significant research needs remain about its full potential as well as the accompanying challenges. A new literature suggests that AI technologies like mobile apps, predictive analytics, and machine learning have been able to facilitate access to financial assets among the historically excluded groups. However, there remain many challenges that include low levels of digital literacy, weak infrastructure, and moral concerns like algorithmic bias and data privacy. Despite these challenges, artificial intelligence has contributed significantly to credit extension to marginalized groups through the use of alternative data sources for credit scoring, the deployment of tailored insurance products, and the automation of financial services.