Leveraging IoT and Fintech Innovations for Financial Inclusion: Opportunities, Challenges, and Policy Implications

Abstract

This study explores the relationship between financial technology (fintech) and financial inclusion, examining how technological advancements are bridging long- standing gaps in financial access across developing economies. Despite notable progress, approximately 1.4 billion adults worldwide remain unbanked, with the highest proportions found in South Asia (23%), Sub-Saharan Africa (43%), and parts of Latin America (30%). By analyzing case studies such as India's JAM Trinity, Kenya's M- PESA, and Brazil's PIX, this research highlights how fintech solutions are overcoming traditional banking obstacles. Findings indicate that AI-driven credit scoring has enhanced accuracy by 35% and increased approval rates for underserved populations by 42%, while blockchain technology has lowered cross-border remittance costs by up to 90%. However, significant barriers remain, including regulatory ambiguities, cybersecurity risks (with fraud attempts rising 180% annually), and infrastructure limitations (only 58% of developing regions have stable internet connectivity). The study concludes that achieving financial inclusion requires a balanced approach that integrates technological innovation, comprehensive regulatory policies, and strategic initiatives to close the digital divide. Key recommendations include establishing adaptable regulatory sandboxes, investing in digital infrastructure, and strengthening consumer protection measures to promote sustainable and inclusive financial services.