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Like most of the tech world, we at Accion Venture Lab have been learning about and experimenting with generative AI (GenAI) over the past year. While there is still much to learn, we remain excited about the potential applications of GenAI for financial inclusion. Artificial intelligence applications in inclusive fintech are not new by any means; the past decade has seen use cases in fraud detection, underwriting, risk pricing, and more. Many of our portfolio companies already leverage AI. Yet, the challenges of reaching and serving low-income and underserved populations — and doing so profitably and at scale — persist. We believe generative AI advancements that complement current AI use cases can address these financial inclusion challenges head-on.

Over the past year, we’ve documented and categorized the opportunities we see in AI for financial inclusion into internal use cases (i.e., within the organization) and external use cases (i.e., interactions with customers, suppliers, regulators, and others). We believe GenAI has the potential to address both for a financial institution by either automating the previously inefficient workflows or serving as a co-pilot that can advise or support current staff in executing a workflow more efficiently. The former is appropriate for procedural and repetitive tasks, while the latter is suitable for workflows where trust in digital interactions is low or a high cost of failure means that financial institutions prefer human involvement. With these considerations, we built this framework to pinpoint AI’s role in overcoming financial inclusion challenges.

Identifying pressing challenges of financial inclusion that can be solved by AI

Identifying the pressing challenges of financial inclusion that can be solved by AI

From this landscape of opportunities, we are currently excited about GenAI’s potential to solve challenges in these categories:

1. Bringing down the cost of KYC and compliance for hard-to-reach customers

For fintechs in frontier markets, the cost of Know Your Customer (KYC) can be prohibitive. Contributing costs can include handholding for new-to-digital customers, cross-verifying sub-optimal data sources, conducting manual checks, handling paper trails, and high rejection rates. We are interested in GenAI-powered solutions that lower costs and increase reach for onboarding workflows like KYC. Use cases include:

2. Underwriting thin-file and no-file borrowers more accurately

Successfully underwriting customers without a data footprint requires more than an accurate underwriting model. A successful underwriting function requires accurate and efficient data collection and the ability of risk officers to interpret model output and make decisions. GenAI can optimize and improve credit decisioning by streamlining how teams manage and process data.

Illustration of a full-stack* AI-led credit infrastructure for thin-file customers

illustration of a full-stack AI-led credit infrastructure for thin-file customers
*not comprehensive

3. Engaging with customers in a more meaningful and cost-efficient way

Users on embedded finance platforms face a big leap from analog to digital transactions, requiring costly handholding. GenAI can provide support for product discovery, customer support, and debt collection for companies offering lending. Examples include:

4. Helping fintechs optimize internal workflows

With workers becoming increasingly comfortable with digital interfaces and GenAI use gaining steam in workplaces, we think applications of GenAI that allow workers to perform internal tasks more efficiently can enable startups to pass on more value to underserved customers. In many cases, such efficiencies can also help frontier fintechs become sustainable in the long run, such as:

While the opportunities are abundant, and we are excited about the potential for AI to accelerate inclusive fintech, founders should tread with caution as the risks from a faulty model without checks can outweigh the potential gains. At Accion Venture Lab, we are committed to championing equitable AI, where technology not only innovates but also accelerates our journey to fair and equitable financial inclusion.

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