Artificial intelligence is doing more than helping banks cut costs and streamline operations. It’s opening the door to a fairer financial system. Its true potential lies in levelling the playing field: giving more people access to credit and offering personalised financial education tailored to real lives, not just credit scores. These advancements don’t just improve inclusion, they redefine it, marking a real turning point for those long overlooked by traditional financial institutions.
Around the world, billions of people remain excluded from mainstream financial services. They can’t access credit, open a bank account, or build savings. This isn’t just a case of being overlooked. It reflects the deep-rooted issue of financial systems being designed to favour profitability over accessibility.
Education around money management is still not where it needs to be, with both the government and the private sector slow to make meaningful steps to see substantial change. As a result, many people remain stuck outside the system, unable to improve their circumstances. In 2023, over 20.3 million adults in the UK were living in financially vulnerable circumstances, facing exclusion from affordable services, forcing them to rely on high-cost alternatives which charge high interest rates for small amounts of credit, driving them further into poverty. This never-ending cycle of financial struggles with no solution has detrimental effects on their quality of life.
AI is starting to change that. It’s breaking down old barriers from a lack of education, location and bias and creating new opportunities for financial inclusion. It’s not just helping those most in need. It’s challenging the entire industry to rethink how it works.
Rethinking Credit
The credit system just doesn’t work for those with a thin credit file, with limited financial tools available to them. This often includes young people, new arrivals to the country, the self-employed. Credit impaired people looking for ways to rebuild after personal challenges such as illness, job loss or divorce are also limited.
Traditional credit scoring models see things as black and white. They provide a static view of someone’s financial past as an overly simplistic numerical score, without acknowledging their current situation or potential. A missed payment years ago can still impact your score today, regardless of whether your financial circumstances have stabilised. The Financial Conduct Authority (FCA) revealed 7.4 million UK adults are currently struggling to keep up with bills and credit repayments. And that number continues to rise, meaning there will potentially be newly damaged credit scores in masses across the country, causing spiralling financial health.
AI can offer a smarter approach to assessing lending potential. By using open banking to analyse alternative financial data such as mobile phone payments, utility bills, subscription services and shopping patterns, AI can build a more accurate and up-to-date picture of someone’s financial health. AI can categorise essential vs discretionary vs income in seconds to give standardised and indisputable income and expenditure assessments and affordability reports. It helps lenders move beyond the old tick-box approach and gives real insight into someone’s ability to manage money.
Ever since the demise of payday lending and the reduction in subprime credit card lenders because of regulatory tightening, available credit to these groups has been in decline, leaving a credit gap. The new tools that use a combination of AI and Open, provide much greater evidence around creditworthiness to support lending decisions that go outside of the usual credit reference agency data and decisioning. The sector has been crying out for new approaches that support lending decisions and work alongside regulation, protect against mass claims complaints and overall support holistic good customer lending outcomes.
Smarter Lending for a Better Future for all
The shift in how we assess financial health has begun and is already having a positive effect. More people are getting access to fairly priced, responsible credit. Lenders, in turn, benefit from a deeper understanding of an applicant’s real financial position. This reduces the risk of default and allows more sustainable lending practices without sacrificing profit.
Crucially, AI can also help prevent borrowers from falling into spiralling debt. Traditional lending models could previously encouraged borrowing more than the lender could afford, but AI tools can identify early warning signs of financial strain, even predicting future outcomes, and recommend more manageable alternatives, like flexible repayment plans or financial coaching. This proactive support helps people avoid high-cost credit products and payday loans. Firms can also identify early warning signs of financial struggles and intervene with customers before borrowing becomes as problem.
Building Financial Confidence Through Personalised Support
One of the most overlooked aspects of financial inclusion is education. Many people are expected to manage complicated financial products without any formal training. Schools rarely teach adequate financial literacy, and most banks fail to offer meaningful support past signing up to the products.
The importance of a healthy credit profile is rarely taught, yet this has huge impact on your quality of life. Good credit affects your life dramatically, like what house you can by or even rent, if you can afford a car, spreading the payment for your dream holiday, or getting a phone contract. There are lots of things that negatively impact your credit profile that most people aren’t aware of, like closing a bank account or credit card or applying for credit too regularly.
Financial education at scale has largely failed. These blanket approaches provided by firms, charities and government bodies haven’t been able to move the needle at scale. This is where AI can really help, providing a much more personalised approach.
AI is helping to bridge this education gap. It can be used to create intelligent digital assistants that provide personalised, real-time advice that guides users through everyday financial decisions such as budgeting, saving and understanding interest rates. As capabilities develop, these tools can be personalised from open banking data and offer tailored tips and support. New apps are already offering consumers intuitive, conversational interfaces that make financial planning more accessible and less intimidating.
It’s not just about education. It’s about empowerment. AI can help users recognise patterns in their spending and make adjustments before problems escalate. It anticipates and prevents problems and promotes lasting financial well-being, not just quick fixes.
Reaching Communities Left Behind
The ongoing closure of high street bank branches has created financial cold spots across the country. AI-powered financial platforms can help fill this gap. With just a smartphone, people can now open an account, apply for a loan or get budgeting support without needing to visit a branch. No more driving long distances, and queuing. Digital tools and apps are becoming ever better and easier to use to fill the gap. Making them accessible for all ages and levels of financial literacy.
Many people feel judged or excluded by traditional banking environments, and some even have a deep mistrust in these services. Digital tools powered by AI offer a non-judgemental, easy-to-understand alternative that allows people to engage with their finances on their own terms.
By offering jargon-free and intuitive financial tools, AI makes it easier for people to engage with the system. For many, this is the first time they feel in control. As trust in these platforms grows, so too does long-term financial resilience.
Ensuring a Fairer Future
The next generation of AI in finance is already changing the financial industry. But to unlock this fairer future, the financial sector must get the fundamentals right. Ethical development and transparency must be non-negotiable. Algorithms need regular auditing to eliminate bias, and individuals must keep conscious control over how their data is used. Only trusted businesses should be allowed access, and third-party sharing should be heavily regulated and transparent. Financial inclusion means very little if it comes at the expense of privacy or fairness.
The current financial system too often punishes people for being poor, while doing little to educate or empower. Banks, lenders, FinTech and policymakers all have an important role to play in changing that. AI gives them the tools to begin.
It won’t fix everything. But it can remove some of the biggest barriers people face today. With the right principles in place, AI can turn financial inclusion from an aspiration into something real and lasting.
A system that works for everyone is not just a possibility. It’s a responsibility
