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Leveraging AI for Deeper Financial Inclusion: Insights from User-level Remittance Big Data Analysis

Hanna Yim SENTBE Inc.

In the realm of digital fintech services, data is generated at an unprecedented rate, offering a wealth of insights into users’ financial behaviors. Academic researchers and development practitioners have delved into this vast ocean of data from migrant remittances originating from Korea and flowing to Southeast and South Asian countries. Through this exploration, invaluable insights have been uncovered that can enhance the financial well-being of migrants who have long been overlooked by traditional finance.

This session aims to share key findings from both quantitative and qualitative analyses, including transaction data and user surveys and interviews. These insights serve as a springboard to inspire audiences of the SOCAP community to advance financial inclusion beyond the current level of fintech contributions.

Highlighted observations include:
– Migrant users’ sensitivity to currency rate fluctuations in digital remittance service usage – they seek for a opportune moments to send more money home rather than regularly sending it immediately after receiving their monthly income;
– Practices of optimizing currency rates through transaction cancellations – users cancel remittance transfer requests multiple times within a short period to capture more optimal currency rates, similar to personal amateur stock traders who cancel buy orders before execution when they see the price go down on a stock trading application;
– Social learning dynamics influencing currency rate optimization among migrant users – the tip of using the cancellation option appears to be spread among users through networks formed by referral schemes; and
– Challenges and opportunities identified in financial literacy education design and implementation – despite higher interest rates for deposits in lower-income countries, migrants from these countries often avoid saving money in banks due to concerns about bank stability.

These findings reveal migrants’ proactive pursuit of maximizing remittance amounts through self-education and social learning. However, they also underscore the lack of timely financial education opportunities, hindering the full potential value, beyond merely a sum of money, of remittances.

The identified financial behaviors provide fertile ground for the application of AI. As the global finance landscape undergoes digital transformation, AI presents opportunities to revolutionize financial education, particularly for those who have limited access to timely, objective, and accurate information about financial services and products.

International migration is often driven by the desire to earn higher income. In this context, migrants require equitable opportunities to leverage financial products and services for saving, investing, financing, refinancing, risk management, and more. AI can play a pivotal role in this regard by optimizing remittance timing for favorable currency rates, automating remittance tracking and budgeting, and offering personalized financial advice to maximize savings and minimize debt. Despite the potential, widespread implementation of these ideas is yet to be realized.

Therefore, this session aims to pave the way for the practical application of these solutions. It acknowledges that this endeavor cannot be achieved solely by remittance service providers; rather, it necessitates collaboration among fintech firms, financial institutions (including banks, microfinance institutions, and insurance companies), and AI experts.

Track

AI = Accelerating Impact

Format

Panel (3 speakers)

Speakers

  • NameHanna Yim
  • TitleBusiness Impact Lead
  • OrganizationSENTBE Inc.
  • NameSangheum Cho
  • TitleConsultant
  • OrganizationWorld Bank
  • NameAlejandro Gonzalez-Caro
  • TitleSenior Systems and Research Analyst
  • OrganizationUNCDF

Description

In the realm of digital fintech services, data is generated at an unprecedented rate, offering a wealth of insights into users’ financial behaviors. Academic researchers and development practitioners have delved into this vast ocean of data from migrant remittances originating from Korea and flowing to Southeast and South Asian countries. Through this exploration, invaluable insights have been uncovered that can enhance the financial well-being of migrants who have long been overlooked by traditional finance.

This session aims to share key findings from both quantitative and qualitative analyses, including transaction data and user surveys and interviews. These insights serve as a springboard to inspire audiences of the SOCAP community to advance financial inclusion beyond the current level of fintech contributions.

Highlighted observations include:
– Migrant users’ sensitivity to currency rate fluctuations in digital remittance service usage – they seek for a opportune moments to send more money home rather than regularly sending it immediately after receiving their monthly income;
– Practices of optimizing currency rates through transaction cancellations – users cancel remittance transfer requests multiple times within a short period to capture more optimal currency rates, similar to personal amateur stock traders who cancel buy orders before execution when they see the price go down on a stock trading application;
– Social learning dynamics influencing currency rate optimization among migrant users – the tip of using the cancellation option appears to be spread among users through networks formed by referral schemes; and
– Challenges and opportunities identified in financial literacy education design and implementation – despite higher interest rates for deposits in lower-income countries, migrants from these countries often avoid saving money in banks due to concerns about bank stability.

These findings reveal migrants’ proactive pursuit of maximizing remittance amounts through self-education and social learning. However, they also underscore the lack of timely financial education opportunities, hindering the full potential value, beyond merely a sum of money, of remittances.

The identified financial behaviors provide fertile ground for the application of AI. As the global finance landscape undergoes digital transformation, AI presents opportunities to revolutionize financial education, particularly for those who have limited access to timely, objective, and accurate information about financial services and products.

International migration is often driven by the desire to earn higher income. In this context, migrants require equitable opportunities to leverage financial products and services for saving, investing, financing, refinancing, risk management, and more. AI can play a pivotal role in this regard by optimizing remittance timing for favorable currency rates, automating remittance tracking and budgeting, and offering personalized financial advice to maximize savings and minimize debt. Despite the potential, widespread implementation of these ideas is yet to be realized.

Therefore, this session aims to pave the way for the practical application of these solutions. It acknowledges that this endeavor cannot be achieved solely by remittance service providers; rather, it necessitates collaboration among fintech firms, financial institutions (including banks, microfinance institutions, and insurance companies), and AI experts.

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