AI-Powered Fintech innovations for credit scoring, debt recovery, and financial access in Microfinance and SMEs

Abstract

The integration of artificial intelligence in fintech is revolutionizing financial services, particularly for microfinance institutions and small and medium-sized enterprises (SMEs). This paper explores the transformative impact of AI-powered innovations in credit scoring, debt recovery, and financial access. AI-driven credit scoring leverages alternative data and advanced machine learning techniques to enhance accuracy, inclusivity, and efficiency, addressing the limitations of traditional methods. In debt recovery, AI optimizes collection processes through predictive analytics, workflow automation, and conversational tools, improving operational efficiency while fostering ethical practices and customer trust. AI also plays a pivotal role in expanding financial access, enabling underserved populations to benefit from tailored digital platforms for lending, savings, and insurance. Despite its potential, AI adoption entails risks, including data privacy concerns, algorithmic bias, and the digital divide, which require careful management. The paper concludes with recommendations for policymakers, financial institutions, and tech developers to ensure AI's ethical and inclusive deployment, fostering economic resilience and equitable growth. Keywords: Artificial Intelligence (Ai), Fintech Innovations, Microfinance Institutions (Mfis), Small And Medium-Sized Enterprises (Smes), Credit Scoring, Financial Inclusion.

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