AI is making a significant impact in Latin America, spurring an exciting era of financial inclusion. With the help of AI, innovative lenders are able to quickly and accurately analyse incredible amounts of data, including non-traditional financial indicators rarely examined by traditional financial institutions. Equipped with enhanced customer insights and speed, lenders are now able to make faster decisions and issue loans to individuals with little to no traditional credit histories — without increasing risk. AI brings greater accuracy to fraud and risk pattern detection to protect lenders’ businesses, while AI-powered chatbots and virtual assistants make financial services more approachable and accessible for all.
When Kueski and other companies use AI to enhance their services, they foster greater participation in the financial system and help bridge critical gaps in emerging markets. It’s a transformative development for underbanked and underserved communities that connects many consumers to the formal economy — many for the first time.
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How key AI features are improving financial inclusion
New AI capabilities are making consumer fintech products more user-friendly and intuitive. This is especially important in Latin American markets with large populations of underserved, underbanked consumers, such as Mexico, where 40 percent of the population lacks traditional credit history. Underbanked consumers have little to no familiarity with traditional consumer banking products. As a result, consumers may feel intimidated to explore the traditional banking economy.
Thankfully, AI can level the playing field by empowering consumers to engage with easy-to-use, unintimidating fintech products. When consumers interact with AI-driven language models, it makes it easier for them to engage in self-service financial activities. AI serves as a guide to assist, as needed, every step of the way. Then as consumers get more comfortable with taking their finances into their own hands, it helps them gain a deeper understanding of their finances while empowering them to take greater control of their future financial decisions.
AI can also analyse large, alternative data sets from both traditional and nontraditional sources to determine consumer creditworthiness more quickly and accurately. When AI is leveraged in loan underwriting in this fashion, it creates opportunities to serve more consumers with a broader range of financial products. Previously unqualified consumers suddenly have access to opportunities that could transform their lives today as well as the long-term trajectories of their financial futures.
Inviting more consumers to the formal economy
Determining a consumer’s creditworthiness has never been a perfect science. As such, until recently, large segments of consumers in underbanked markets have been unable to participate in the formal economy. For lenders, the risks were far too great. However, now that AI can quickly analyse large sets of alternative credit data with great precision, the lending landscape is ripe for change.
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By GlobalDataWith the latest in AI technology, lenders can accurately assess the creditworthiness of consumers who are underbanked or have no traditional credit histories. This expanded risk assessment makes it possible for lenders to offer tailored financial services to underserved populations, fostering greater economic inclusion while empowering more individuals to participate in the formal economy.
Merchants also have much to gain. For example, merchants can partner with fintech companies that provide inclusive, AI-driven, buy now, pay later (BNPL) solutions to boost sales and tap into a wider base of consumers. What’s more, AI’s ability to accurately detect fraud patterns and weed out bad actors means lenders can confidently accept full responsibility for chargebacks and other risks. This approach to risk allows merchants to invest in innovative BNPL solutions with significant peace of mind.
The future of AI-powered financial inclusion
AI will also evolve financial services and financial inclusion by introducing greater personalisation. Algorithms will expose consumers to the financial products they desire while helping fintech companies tailor products to consumers’ unique interests and needs.
Innovators within this space will become more essential than ever as financial services providers continue to find ways to use AI to improve the lives of consumers in emerging markets. In using AI/ML to quickly and confidently assess creditworthiness and using non-traditional sources of data, fintechs at the forefront of AI are able to provide more personal loans than the constraints of traditional banking allow. AI has been a catalyst for personalised financial solutions to a broader segment of consumers, democratising access to credit and reaching those underserved by traditional financial institutions.
By addressing barriers to financial access and empowering both consumers and lenders with AI, innovative fintech solutions are contributing to long-term economic empowerment. These AI-powered solutions are connecting more consumers to the formal economy and introducing greater inclusivity throughout Latin America.
Krishna Venkatraman is Chief Data Officer at Kueski – the Mexico based BNPL and consumer lending platform
