A new report from the Islamic Development Bank Institute (IsDBI) has outlined how Islamic finance and artificial intelligence can enhance financial inclusion. The Report entitled “Artificial Intelligence and Islamic Finance: A Catalyst for Financial Inclusion”, provides a comprehensive Islamic finance framework for financial inclusion, identifies the major challenges hindering the adoption of artificial intelligence (AI), and recommends solutions to leverage Islamic finance using AI to enhance financial inclusion.
The report recommends a holistic solution for financing small and medium enterprises with two pillars that provide easy access to capital more efficiently. The first pillar is forming a sustainable and inclusive framework consisting of a staggered approach that maps the need for microentrepreneurs at different business development levels to achieve financial inclusion. The proposed Islamic finance framework has the potential to build an inclusive national-level framework for access to finance, enabling all segments of society without increasing indebtedness.
The second pillar is developing a financial infrastructure that recognizes access to capital as a need of the economy. A resilient infrastructure helps with better and efficient delivery of financial services. The infrastructure in this context is built on both physical and intellectual capabilities. Financial technology’s intellectual contribution may include better storage, speedy analysis and use of alternative data and application of AI for decision making.
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The financial pillar aims to capture, store, and make available all possible touchpoints necessary to reduce information asymmetry and increase access to capital. Digital infrastructure is the most critical element of the overall financial infrastructure, especially as data inclusion leads to financial inclusion.
In his remarks on the release of the report, IsDBI Acting Director General and IsDB Group Chief Economist, Dr. Sami Al-Suwailem, stated that the report is timely coming when the COVID-19 pandemic is causing serious economic disruptions worldwide.
He said, “The report’s central message is that Islamic finance, built on a foundation of social and economic justice, when leveraged with AI and related technologies, can be a major driver for sustainable development through inclusive participation and risk-sharing.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry