AI PROMOTING FINANCIAL INCLUSION THROUGH NEOBANKS: A PLS – SEM MODEL

Abstract

AI-driven neobanking is a pivotal force in accelerating financial inclusion, utilizing artificial intelligence, machine learning (ML), and data analytics to provide accessible, affordable, and personalized banking to previously unbanked or underserved populations. These digital-only institutions bypass the need for physical infrastructure, reducing costs and overcoming geographical barriers to bring banking to rural and marginalized communities. This study investigates how AI based Neobanking  promotes financial inclusion by analyzing the impact of

financial inclusion and services offered by Neobanks on Trust .

This study used a quantitative research design, and primary data were  gathered with a structured questionnaire that used a 5-point Likert scale. We analyzed the data  using Partial Least Squares–Structural Equation Modelling (PLS-SEM). The findings reveal that financial inclusion and services offered by neo banks have significant positive effect on trust . Additionally, neobanking was found to improve financial literacy and responsible financial behavior, including budgeting, saving, and informed spending. Despite these positive outcomes, challenges related to data security, trust, an regulatory compliance were identified, highlighting the need for robust policies and safeguards. Overall, the study concludes that neo-banking is a transformative force in modern finance, promoting financial literacy, inclusion, and behavioral discipline, thereby empowering users to achieve greater financial autonomy. The findings offer valuable insights for policymakers, financial institutions, and digital banking innovators to enhanceuser-centric, secure, and inclusive digital financial services.