Fintech for Inclusion or Exclusion? The Impact of Digital Credit Scoring Algorithms on Access to Finance for the Urban Poor
Downloads
Background. The rise of fintech and digital financial services has transformed access to finance, particularly for underserved populations. However, concerns have emerged regarding the potential for digital credit scoring algorithms to either facilitate inclusion or perpetuate exclusion, especially for the urban poor. In many developing countries, these algorithms are being used to assess creditworthiness, but their reliance on big data, social media activity, and other non-traditional factors raises questions about fairness and transparency.
Purpose. This study aims to evaluate the impact of digital credit scoring algorithms on access to finance for the urban poor, focusing on whether these algorithms contribute to financial inclusion or exclusion.
Method. The research adopts a mixed-methods approach, combining quantitative data analysis from fintech platforms with qualitative interviews from urban poor individuals in Indonesia.
Results. The findings reveal that while digital credit scoring has improved access to financial products for some, it has also disproportionately excluded individuals with limited digital footprints or those lacking access to traditional banking systems.
Conclusion. The study concludes that digital credit scoring, if not carefully regulated, risks exacerbating financial inequality. Policy recommendations include enhancing transparency, addressing biases in algorithmic decision-making, and ensuring greater financial literacy to bridge the digital divide.
Ang?n, M., Güner, E., & K?l?nçarslan, P. (2025). AI strategies for financial inclusion and gender equality in MENAT: Evidence from Egypt, Turkey, and the UAE. Global Finance Journal, 68, 101181. https://doi.org/10.1016/j.gfj.2025.101181
Armah, A. K., Li, J., & Wei, M. (2025). Effect of infrastructure and technological factors on slum online commerce and product delivery: A structural functionalism perspective. Journal of Retailing and Consumer Services, 85, 104292. https://doi.org/10.1016/j.jretconser.2025.104292
Badrudin, R., Fahlevi, M., Dahlan, S. P., Dahlan, O. P., & Dandi, M. (2025). Financial stress and its determinants in Indonesia: Exploring the moderating effects of digital knowledge, age, and gender. Journal of Open Innovation: Technology, Market, and Complexity, 11(2), 100528. https://doi.org/10.1016/j.joitmc.2025.100528
Bisht, N. S., Noronha, E., & Tripathy, A. K. (2025). Digital technologies exacerbating mission drift in microfinance institutions: Evidence from India. Information and Organization, 35(1), 100541. https://doi.org/10.1016/j.infoandorg.2024.100541
Bredice, M., Formisano, A. V., Kullafi, S., & Palma, P. (2025). Access to credit and fintech: A lexicon-based sentiment analysis application on Twitter data. Research in International Business and Finance, 77, 102875. https://doi.org/10.1016/j.ribaf.2025.102875
Chhillar, N., Sharma, K., & Arora, S. (2025). Exploring the role of digital financial literacy and personal financial behavior in shaping financial stress and well-being in the digital age. Acta Psychologica, 259, 105308. https://doi.org/10.1016/j.actpsy.2025.105308
Dunan, A., Mudjiyanto, B., Setiawan, A. B., Syarifuddin, S., Pala, R., Rustam, M., Dirgahayu, D., Buyamin, B., Nuryana, M., & Hartiningsih, H. (2025). Artificial Intelligence in E-Entrepreneurship Training: International Journal of E-Entrepreneurship and Innovation, 15(1). https://doi.org/10.4018/IJEEI.386065
Guo, B., & Guo, J. (2025). The digital divide and household risky financial investments in China. International Review of Economics & Finance, 104, 104565. https://doi.org/10.1016/j.iref.2025.104565
Hidayat-ur-Rehman, I., Alam, M. N., Bhuiyan, A. B., & Zulkifli, N. (2025). The FinTech adoption in rural areas of Pakistan: An application of SEM and ANN approach. Asia-Pacific Journal of Business Administration, 18(1), 258–287. https://doi.org/10.1108/APJBA-02-2024-0111
Ho, D. B., Duong, C. D., Tran, M. L., Luong, T. S., & Tran, T. P. H. (2025). Big data analytics powered by artificial intelligence and entrepreneurial resilience: A moderated mediation model of technological turbulence and business innovation model. Journal of Open Innovation: Technology, Market, and Complexity, 11(3), 100611. https://doi.org/10.1016/j.joitmc.2025.100611
Ho, T. L., Ngoc, L. H., & Ho, T. H. (2025). Digital inclusion or exclusion? Exploring the moderating role of governance in digitalization’s impact on income inequality in developing countries. Research in Globalization, 10, 100283. https://doi.org/10.1016/j.resglo.2025.100283
Hu, H., Wei, T., & Wang, A. (2025). Does digital transformation enhance bank soundness? Evidence from Chinese commercial banks. Journal of Financial Stability, 76, 101374. https://doi.org/10.1016/j.jfs.2025.101374
Huang, Z., Dong, H., Liu, Z., & Albitar, K. (2025). Unleashing the empowered effect of data resource on inclusive green growth: Based on double machine learning. Economic Analysis and Policy, 85, 1270–1290. https://doi.org/10.1016/j.eap.2025.01.018
Huda, S. S., Akhtar, A., Ahmed, E., Samiul Hoq, K. Md., & Islam, Md. N. (2026). Artificial intelligence in agriculture across south Asia: Technology adoption, improvements, and sustainability outcomes. Sustainable Futures, 11, 101620. https://doi.org/10.1016/j.sftr.2025.101620
Hussain, K., Jian, Z., & Khan, A. (2025). Circular economy and EU’s energy transition: The moderating and transitioning effects of financial structure and circular carbon technology innovation: Evidence from C-Lasso and PSTR approaches. Journal of Cleaner Production, 505, 145434. https://doi.org/10.1016/j.jclepro.2025.145434
Joseph, D., Miri, D., & Mswaka, W. (2025). Digital technology affordance and constraints in informal economies: A micro-entrepreneurial study. Journal of Small Business and Enterprise Development, 32(4), 788–816. https://doi.org/10.1108/JSBED-10-2023-0480
Khanchel, I., Lassoued, N., & Khiari, C. (2025). Untangling the skein: The impact of FinTech on social and financial performance in microfinance institutions. Regional Science Policy & Practice, 17(8), 100208. https://doi.org/10.1016/j.rspp.2025.100208
Li, J., Zhou, W., Li, X., & Wu, Y. (2025). Digital credit scoring and household consumption: Evidence from Sesame Credit in China. Emerging Markets Review, 69, 101372. https://doi.org/10.1016/j.ememar.2025.101372
Li, Y., Xia, Y., Sun, Z., & Sun, N. (2025). Does digital transformation affect systemic risk? Evidence from the banking sector in China. International Review of Financial Analysis, 102, 104137. https://doi.org/10.1016/j.irfa.2025.104137
Liu, B., Chen, Z., Wang, Y., & Sun, X. (2025). Fintech empowers enterprises to practice ESG: The role of political background of executives. Energy Economics, 142, 108183. https://doi.org/10.1016/j.eneco.2025.108183
Muat, S., Mahdzan, N. S., Sukor, M. E. A., Fachrurrozi, & Sari, N. (2025). The role of financial inclusion, financial literacy and digital payment adoption in Indonesian millennials’ financial well-being. International Journal of Bank Marketing, 43(9), 1938–1968. https://doi.org/10.1108/IJBM-01-2024-0022
Munir, S., Rashid, M., & Ghaffar, A. (2026). When good institutions backfire: Reassessing entrepreneurship drivers in post-socialist Europe. Strategic Business Research, 2(1), 100039. https://doi.org/10.1016/j.sbr.2025.100039
Oluoch, W., & Alhassan, A. L. (2026). Bridging the gender credit gap in low-income countries: The impact of digital financial inclusion. Emerging Markets Review, 70, 101389. https://doi.org/10.1016/j.ememar.2025.101389
Paul, A., & Machavaram, R. (2025). Generative AI in agriculture 4.0: Applications, challenges, and integration in the Indian context. Food and Humanity, 5, 100889. https://doi.org/10.1016/j.foohum.2025.100889
Tran-Truong, P. T., Pham, M. Q., Son, H. X., Nguyen, D. L. T., Nguyen, M. B., Tran, K. L., Van, L. C. P., Le, K. T., Vo, K. H., Kim, N. N. T., Nguyen, T. M., & Nguyen, A. T. (2025). A systematic review of multi-factor authentication in digital payment systems: NIST standards alignment and industry implementation analysis. Journal of Systems Architecture, 162, 103402. https://doi.org/10.1016/j.sysarc.2025.103402
Trotta, A., Gallucci, C., Rania, F., Strano, E., & Tipaldi, R. (2026). The “black box” of digital finance: An umbrella review of the challenges and drawbacks in advancing financial inclusion. Research in International Business and Finance, 81, 103188. https://doi.org/10.1016/j.ribaf.2025.103188
Wang, H., Jiang, S., Li, X., Alipour, O., & Agag, G. (2026). Can AI make us less green? Insights from four experiments on digital speed, time perception, and sustainable consumption. Journal of Retailing and Consumer Services, 90, 104696. https://doi.org/10.1016/j.jretconser.2025.104696
Xin, B., Wang, Y., Peng, W., Tan, H., & Kwon, J. (2026). Advancing energy justice through ESG: The role of confucian culture and digital finance. Research in International Business and Finance, 83, 103296. https://doi.org/10.1016/j.ribaf.2026.103296
Xu, A., Dai, Y., Hu, Z., & Qiu, K. (2025). Can green finance policy promote inclusive green growth?- Based on the quasi-natural experiment of China’s green finance reform and innovation pilot zone. International Review of Economics & Finance, 100, 104090. https://doi.org/10.1016/j.iref.2025.104090
Yang, T., & Yang, T. (2025). The impact of China’s digital financial inclusion on multidimensional poverty of households. Journal of Digital Economy, 4, 289–301. https://doi.org/10.1016/j.jdec.2025.11.006
Ye, S., Tu, A., Ye, Y., & Liao, F. (2025). Digital divide, agricultural supply chain finance, and the urban-rural income gap in China. Sustainable Futures, 10, 100863. https://doi.org/10.1016/j.sftr.2025.100863
Zhao, Y., & Ma, F. (2025). Will fintech enhance financial regulation? Research in International Business and Finance, 78, 103005. https://doi.org/10.1016/j.ribaf.2025.103005
Zheng, X., Du, X., & Wu, W. (2025). The impact of digital government on cross-regional investment: Evidence from Chinese cities. Economic Analysis and Policy, 87, 99–122. https://doi.org/10.1016/j.eap.2025.05.055
Zhu, D. (2025). Digital financial development, farmers’ digital financial behavior, and relative poverty: An empirical analysis based on data from farmers in Yongzhou City. Economic Analysis and Policy, 86, 1801–1819. https://doi.org/10.1016/j.eap.2025.05.006
Copyright (c) 2025 Samantha Gonzales, Luis Santos, Andres Villanueva
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
