Artificial Intelligence and FinTech Innovation in Emerging Markets: The Role of Digital Financial Capabilities and Customer Trust

Abstract

This paper investigates the role of Artificial Intelligence (AI), Digital Financial Capabilities (DFC) and Customer Trust in digital FinTech Innovation in emerging markets. The statistical research design used was quantitative, cross-sectional, and a questionnaire with five-point Likert scales was used for the collection of data, reaching 300 adult FinTech users. Intelligent automation, predictive analytics, personalized financial services, fraud detection and AI powered decision-support were used to evaluate the impact of AI. The impact of AI was evaluated using the following trends: intelligent automation, predictive analytics, personalized financial services, fraud detection, and AI powered decision-support. DFC identified the skills that the users required to access, understand, assess and safely utilize digital financial technologies and Customer Trust addressed security, reliability, transparency, privacy and responsible service practices. The concept of FinTech Innovation stood for better digital financial products and service delivery, customer experience, personalization and efficiency. Descriptive findings indicated positive perceptions on all constructs ranging from mean scores of 3.92 (SD = 0.71) for AI to 3.79 (SD = 0.76) for Customer Trust and 3.95 (SD = 0.69) for FinTech Innovation for DFC. The reliability tests showed low item-total correlation, with the overall .24 item-total alpha range from .89 (AI) to .92 (FinTech Innovation), and .91 (Customer Trust), .87 (DFC), and .89 (AI). The results highlighted that the capital markets in emerging markets need technological intelligence, users who can apply the technology and trustworthy digital environments. It is crucial to address issues of customer-friendly technology governance, customer security, privacy safeguarding, transparency, and transformational digital financial education in the governance of inclusive and sustainable innovations in the financial sector with the help of artificial intelligence technologies, the study has pointed out.

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