*1.2. Industry 4.0*

Industry 4.0, also known as the fourth industrial revolution, can be described as the advent of cyber-physical systems involving entirely new capabilities for people and machines (Schwab 2015). While these capabilities are reliant on the technologies and infrastructure of the third industrial revolution, the 4IR represents entirely new ways in which technology becomes embedded within societies and even our human bodies (Schwab 2015). 4IR is defined as the fusion of technologies that is blurring the lines between the physical, digital, and biological worlds (Schwab 2015; Moloi 2020). The term 4IR was first coined by Klaus Schwab, founder and executive chairman of the World Economic Forum. *"The 4IR is sometimes described as an incoming thunderstorm, a sweeping pattern of change visible in the distance, arriving at a pace that a*ff*ords little time to prepare. While some people are ready to face the challenge, equipped with the tools to brave the change and take advantage of its e*ff*ects, others do not even know a storm is brewing"* (Deloitte 2018a).

The 4IR is affecting almost every facet of our daily life, impacting how individuals relate to technology and changing how and where work is done (Schwab 2019). Another way to have an understanding of industry 4.0 is to appreciate the technology used in this revolution. Some of the technologies include artificial intelligence and robotics, ubiquitous linked sensors, virtual and augmented realities, additive manufacturing, blockchain and distributed ledger technology, advanced materials and nanomaterials, energy capture, storage and transmission, new computing technologies, biotechnologies, geoengineering, neurotechnology, space technologies. These are some of them that are driving the fourth industrial revolution in the 21st century (Schwab 2019; Moloi 2020).

#### *1.3. Brief Definition and History of Artificial Intelligence*

As propounded by Hassani et al. (2020), artificial intelligence has multiple definitions. As a result, no one definition can define artificial intelligence (Hassani et al. 2020). Legg and Hutter (2007) came up with 70 definitions of artificial intelligence covering multiple views. Colom et al. (2010) defined artificial intelligence as a general mental ability for reasoning, problem-solving, and learning while Snyderman and Rothman (1987) defined artificial intelligence as a general mental ability for reasoning, problem-solving, and learning. Gottfredson (1997) also defined artificial intelligence where more emphasis was given to learning swiftly and the ability to learn from experiences. Hassani et al. (2020) also defined AI as an intelligent system created to use data and to analyze the data as well as involving the performance of certain tasks without the need for programming. AI has a strong capacity to create a foundation for decision making and support through insights and results, collected from vast and complex data sets which are compressed into the manageable scale (Hassani et al. 2020).

There were generations of scientists, mathematicians and philosophers who had the concept of AI in their minds by the 1950s (An Editorial with 52 Researchers 1994). Gottfredson (1997) insinuated that the history of AI began in the periods of human classical civilization with myths and rumours of artificial beings endowed with intelligence or consciousness by master craftsmen. The attempt by the classical philosophers to describe the process of human thinking as the mechanical manipulation of symbols gave more meaning to the concept of AI (Colom et al. 2010). As articulated by Colom et al. (2010), the effort in describing human thinking as mechanical manipulation culminated in the invention of programmable digital computers in the 1940s. These programmable computers were machines premised on the abstract essence of mathematical reasoning (Hassani et al. 2020). The ideas around the developed device influenced several scientists to start discussing, with seriousness, the possibility of coming up with an electronic brain (Gottfredson 1997).

According to Hassani et al. (2020), artificial intelligence was mentioned for the first time in 1956 at a computing conference. In 1956 in a workshop at Dartmouth College during the summer of 1956, the research on AI began. The people who attended the workshop became the leaders of AI for decades (Hassani et al. 2020). Considerable investment in AI boomed in the first decades of the 21st century due to availability of large data sets, powerful computer hardware and due to the availability of new methods. This motivated the application of machine learning to many problems in academia and industry (Frank 2019; Hassani et al. 2020). In this century AI has evolved from being an academic field to become a key factor in the social and economic mainstream technologies including banking, medical diagnosis, autonomous vehicles as well as voice-activated assistance (Frank 2019).

#### *1.4. Literature Review*

The literature on digital financial inclusion is available, especially literature on how mobile phones are increasingly influencing financial inclusion. Ozili (2018) insinuated that digital financial inclusion is a critical component of the efforts applied in trying to include the groups of people who are not part of the formal financial system. Ozili (2018) went on to argue that digital finance is beneficial to financial users, providers governments and the general economy. However, Ozili (2018) believes that there are many issues which still need to be resolved in digital finance, about regulation among others.

Additionally, Dawei et al. (2018) also argued that it is a paradox in a globalized world to have a third of the population who are not part of the formal financial system, yet literature points out that financial services can assist to improve the welfare of the households and to promote small businesses. Dawei et al. (2018) believes that the inherent limitations of the conventional financial system hinder the prospects of the excluded population. However, Dawei et al. (2018) believes that digital financial inclusion through digital currency and mobile technology can help penetration of financial systems in the unserved parts of the world or country. It is believed that the high cost for small-ticket financial transactions makes these services virtually impossible and unavailable (Dawei et al. 2018).

Dawei et al. (2018) went further to state that digital currency and mobile technology allow small transactions at an affordable cost which is a benefit to small businesses and vulnerable groups. Digital currency and mobile transactions can also help to reduce time and to make transactions in bulk and with accuracy (Dawei et al. 2018). Many developing nations such as Brazil, India, Nigeria and other African nations like Kenya and Zimbabwe embraced mobile technology to overcome the problem of financial exclusion.

Sapovadia (2018) also argued that digital financial inclusion is different from traditional banking in that it serves the clients without requiring historical records. Sapovadia (2018) went further to state that digital financial inclusion uses data technology and AI to unravel credit assets of clients and mitigate information asymmetry. It is believed that the availability of AI and big data allow the use of alternative information like shopping history, online behavior pattern, transaction record and many other potential information sources of information not common to the convectional banking for credit scoring. Credit Ease Financial Cloud is one of the examples of big data which provides open and always accessible functions of anti-fraud, risk management, real-time loan granting and targeted marketing to external and internal people.

In addition, Levin et al. (2018) also argued that the crisis of the 1960s created the need for the growth and development of electronic trading and the development of financial services technology. The author believes that technology like AI is important in the financial sector as people are preparing for the new era. Hotchkiss and Lee Kuo Chuen (2018) support Levin et al. (2018), Hotchkiss and Lee Kuo Chuen (2018) argued that the development of innovations like fintech and blockchain technology

has taken the attention off the people around the world and the attention of the banking world. Hotchkiss and Lee Kuo Chuen (2018) stated that digital financial inclusion is doing great things in Myanmar, one of the fastest-growing economies in Southeast Asia where approximately 52 million people who live in the country are gaining access through digital financial inclusion.

Killeen and Chan (2018) also stated that bitcoin blockchain is creating new ways of transacting with security without the need for an intermediary. Killeen and Chan (2018) went on to insinuate that the use of ledger to verify and record identity and asset ownership for individuals to have access to the transactional account is free from the limitation associated with centralized controls when blockchain is used. Killeen and Chan (2018) believe that blockchain is satisfying the old needs previously served by convectional banks more efficiently which risks rendering the existence of the old central institutions like development banks and large scale investment firms obsolete. Killeen and Chan (2018) further argued that global financial institutions must try to respond swiftly to the changes in culture and dynamic values accompanied by blockchain innovation.

David-West (2015) also believes that digital financial inclusion can help many households who were previously excluded to have access to formal financial services. David-West (2015) believes that documentation requirements, costs and literacy issues are some of the factors forcing households and individuals to adopt informal financial services. The existence of mobile money and digital currency has revolutionized the traditional perspective of financial access and inclusion. Moreover, digital financial currency and mobile money have led to the introduction of new financial service providers such as mobile money operators sometimes referred to as agents in many African countries such as Kenya and Zimbabwe. The existence of mobile money also resulted in policy changes that led to the existence of other operators which led to the unbanked community being offered financial services (David-West 2015).

Rathi (2016) also stated that digitization has enabled a large population of individuals who were not financially active to be able to enjoy financial services due to the fact that digital tools make the financial services affordable to many. Rathi (2016) also reiterated that developing nations such as India are relying on digital technology to provide financial services to the unbanked population. In a way, digital technology is allowing the previously unbanked population to be included in the mainstream formal financial market. Chu (2018) also argued that digital technology is expanding financial inclusion where it is made possible for the unbanked to be able to access banking services like savings, insurance, and other financial services crucial to the unbanked population and those living in poverty. Chu (2018) argued that financial inclusion is important to bridge the gap between the physical, digital and the psychological use of money. Chu (2018) also believes that bringing together the digital financial tools such as blockchain with the psychological tools like financial education can allow the unbanked to have access to financial services which can help to break the poverty cycle.

Salampasis and Mention (2018) in the paper, *fintech: harnessing innovation for financial inclusion,* argued that financial inclusion has been taken as the soft side of financial services with limited attention given to it from the regulators, and policymakers despite its importance in the empowerment of the marginalized population. Salampasis and Mention (2018) argued that many disadvantaged people in society are left out of the formal financial market, thus creating inequality and general dependence syndrome by those who are unable to access financial services and making the fight against poverty difficult. However, Salampasis and Mention (2018) also suggested that the emergence of fin-tech, a new breed of financial innovation, is increasingly closing the gap between unbanked, underbanked and developed societies. Salampasis and Mention (2018) believe that digital technology is opening previously closed doors in the digital economy for many individuals leading to more equitable growth and society.

Muneeza et al. (2018), in the paper, *the application of blockchain technology in crowdfunding: towards financial inclusion* via *technology,* posit that the advent of innovative digital technologies such as blockchain and crowdfunding is showing new sustainable ways to support the economically poor and the vulnerable people. Muneeza et al. (2018), after an investigation of the development of crowdfunding in Malaysia, found out that crowdfunding is a necessary way to promote financial inclusion while blockchain can assist in mitigating the risks faced by platform operators.

In summary, the empirical literature review discovered that literature on digital financial inclusion is available, especially literature on how mobile phone technologies are influencing financial inclusion. In this review, it was noted that digitization has enabled a large population of individuals who were not financially active to be able to enjoy financial services because digital tools make the financial services affordable to many. The review also discovered that digital technology is expanding financial inclusion where it is made possible for the unbanked to be able to access banking services like savings, insurance, and other financial services crucial to the unbanked population and those living in poverty. The other important aspect noted was that financial inclusion is important to bridge the gap between the physical, digital and the psychological use of money. Authors like Arifin (Muneeza et al. 2018) indicate that the emergence of innovative digital technologies such as blockchain and crowdfunding is showing new sustainable ways to support the poor.

#### *1.5. Research Methodology*

This study article is premised on desktop research to investigate the impact of AI on digital financial inclusion. The study used unobtrusive research techniques to analyze objectively the impact of AI on digital financial inclusion. The techniques include conceptual and documentary analysis of peer-reviewed journals, reports and other authoritative documents on AI and digital financial inclusion.

Table 1 gives an estimated number of journal articles, reports and other authoritative documents which include news articles and web page articles that helped to shape the direction of the study. Some of the journal reports and news articles listed were not necessarily referenced in the paper as they contributed to ideas which led to the development of the paper. The criteria used in the selection of the articles, reports and other important documents were simply the relevance of the articles in the provision of information useful for the main objective of the study which was to investigate the impact of AI on digital financial inclusion. Conceptual analysis and document analysis were used in the study because documents come in a variety of forms, making documents a very accessible and reliable source of data. Obtaining and analysing documents is often far more cost-efficient and time-efficient compared to conducting field research or experiments.


**Table 1.** Journal articles, reports and news articles that shaped the trajectory of the study.
