Ever wondered why some people can easily get loans while others can't? It often comes down to one thing: data. Or more specifically, the lack of it. You see, traditional banks love seeing long credit histories before they'll even think about lending money.
But here's the thing - what about the 1.4 billion adults worldwide (As per World Bank’s Global Financial Inclusion Report 2021) who've never even had a bank account? It's a massive challenge, but here's where things get interesting: AI in finance is changing the game.
Getting Creative with Limited Data
Think of it like trying to piece together a puzzle when you're missing half the pieces. That's what financial companies face when trying to serve communities with limited banking history. But we're not letting that stop you. Instead, we could help you get creative with some fascinating approaches.
Learning from Similar Markets (The Transfer Learning Strategy)
Remember how you learned to ride a bike? Once you got the hang of it, switching to a different bike wasn't so hard - you transferred those skills. That's exactly what transfer learning in AI does. If a lending model works well in deprived areas of urban Chicago, maybe it can teach us something about lending in rural Indonesia. The contexts might be different, but some fundamental patterns in human financial behavior remain surprisingly consistent, wherein AI in finance finds its pathway.
Creating "What-If" Scenarios with Synthetic Data
This one's pretty clear and clever. When we don't have enough real data, we can create artificial data that behaves just like the real thing. It's like running fire drills - you're preparing for situations that haven't happened yet. Want to know how your lending model would handle an economic downturn in a region that's never experienced one? Synthetic data can help you figure that out.
The Power of Federated Learning
Here's where things get really interesting. Imagine if banks, phone companies, and online retailers could all work together to better understand their customers - without actually sharing any customer data. Sounds impossible? That's exactly what federated learning does. It's like having a team of experts who can share their knowledge without revealing their sources.
Making It Work in the Real World
Of course, implementing these AI finance solutions isn't as simple. There are plenty of challenges to tackle:
Quality Matters More Than Ever
Garbage in, garbage out - that old computing saying becomes even more critical when you're working with limited data. Think about how a small typo in someone's name could lead to them being denied a loan. That's why financial companies are obsessing over data quality, using everything from automated checks to standardized formats.
Ensuring high-quality data is essential for successful AI implementation. At Mastek, this will involve:
- Automated Validation: Identifying and flagging data anomalies with automated checks.
- Standardisation: Ensuring data is comparable across sources by standardising formats.
- Deduplication: Eliminating duplicate entries, especially in markets with informal identification systems.
- Imputation: Handle missing data using advanced techniques to prevent exclusion of certain segments.
Keeping It Fair and Transparent
Here's something crucial: when you use AI to make financial decisions, you need to be able to explain those decisions clearly. It's not just about following regulations - it's about building trust. If someone gets denied a loan, they deserve to know why. Thus, real-time monitoring and regular audits are critical to maintaining data quality. These processes can help:
- Identify Biases: Audits help uncover systemic biases in data collection.
- Track Model Performance: Regular back testing ensures models remain accurate and responsive to changing conditions.
- Prevent Data Degradation: Early identification of data quality issues prevents downstream model performance issues.
Why This Matters
This isn't just about technology or finance - it's about giving people opportunities. When someone gets their first loan to start a small business or opens their first savings account, it can change their entire family's future. That's why getting these AI solutions right is so important.
And here's the exciting part - we're just getting started. As AI in banking and finance continues to evolve, we're finding new ways to make financial services more accessible to everyone, regardless of their background or location.
Moving Forward
The future of financial inclusion isn't about choosing between human judgment and artificial intelligence - it's about combining both to create something better than either could achieve alone. It's about using technology not just to make profits, but to make a difference.
So next time you tap your phone to make a payment or quickly get approved for a credit card, remember - there are brilliant minds working hard to bring these same conveniences to billions of people who've never had access to them before. And that's something worth getting excited about.
