Abstract: In recent decades, a “financial inclusion assemblage” led by international development agencies, private foundations, industry, regulators, governments and academia has invested in developing initiatives to expand global participation in the formal financial sector. Increasingly, financial technology (fintech) firms promise that their platforms provide the most expeditious path to democratic access to financial markets and, consequently, digital financial inclusion. This article discusses artificial intelligence tools integrated into consumer mobile payment platforms that facilitate micro-lending in Kenya and alternative lending in the United States. Proponents suggest that these digital platforms are more efficient and engender less bias than conventional approaches. Evidence increasingly demonstrates, however, that these technologies may not be neutral and may, in fact, replicate or amplify bias. In this article, we examine the myths and misperceptions of financial inclusion and the limitations of the fractured regulatory environment in many countries integrating fintech in underbanked communities. We explore how financial inclusion may not only create channels for prosperity and improvement but also engineer debilitating and sometimes precarious financial circumstances for users. Regulators have taken steps towards addressing concerns, but consumer protection requires greater focus to create lasting and significant welfare reforms. Arguably, the solution may not be a specific regulatory action, but rather reforms aimed to address the underlying causes of financial exclusion.
Keywords: financial inclusion; fintech; credit scoring; machine learning; artificial intelligence; mobile money; payment systems; financial regulation; credit; lending
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