Can AI Uplift Entrepreneurs That Traditional Banks Reject? | Mercedes Bidart | TED

Overview

Mercedes Bidart explores how artificial intelligence (AI) can empower informal entrepreneurs in Latin America who are excluded from traditional banking systems. By transforming invisible data from their phones into financial identities, AI enables these entrepreneurs to access fair loans, fostering economic growth and inclusion.

Notable Quotes

- Being poor is very expensive. – Mercedes Bidart, on the hidden costs of financial exclusion.

- AI is allowing us to see gold where others saw stones. – Mercedes Bidart, on the transformative potential of AI in financial inclusion.

- You say yes, not because of a bank statement, but because of millions of quiet signals that tell us that she shows up, she delivers, and she can be trusted. – Mercedes Bidart, on redefining creditworthiness.

🌍 The Role of Trust in Informal Economies

- Growing up in Argentina, Bidart observed how trust functioned as an invisible currency in her parents' small business.

- In Colombian informal settlements, trust similarly underpins local economies, where shopkeepers extend credit based on personal relationships rather than financial records.

- Despite trust being central to these economies, traditional banks reject entrepreneurs without formal credit histories or collateral.

📉 The Cost of Financial Exclusion

- Entrepreneurs like Maria, a Venezuelan migrant in Colombia, rely on predatory lenders charging exorbitant interest rates due to lack of access to formal credit.

- Financial exclusion forces the poor to pay more for basic goods and services, as they can only afford small, incremental purchases.

- Bidart highlights the systemic barriers that prevent 99% of Latin America's microbusinesses—despite contributing a third of the region's GDP—from accessing formal loans.

🤖 Leveraging AI to Build Financial Identities

- Bidart and her team developed AI-powered tools to transform informal entrepreneurs' invisible data into measurable financial identities.

- Key data sources include:

- Text messages (e.g., bill payments, order confirmations).

- Videos of businesses, analyzed for inventory, tone, and potential.

- Social media activity, such as engagement on Facebook or Instagram.

- These tools replace traditional, biased, and slow risk assessments with scalable, objective, and efficient AI models.

💡 Tailored Financial Solutions for the Informal Sector

- By analyzing millions of data points, AI can determine not only loan eligibility but also optimal loan amounts, repayment terms, and seasonal adjustments.

- This approach enables hyper-personalized financial products that meet the unique needs of informal entrepreneurs.

- Over three years, Bidart's initiative has served 26,000 entrepreneurs, achieving market-standard accuracy in risk assessment.

🌟 Redefining Creditworthiness and Financial Systems

- AI is reshaping the financial system by recognizing value in previously overlooked populations.

- Entrepreneurs can now build a live, daily-updated financial history, drastically reducing the time required to qualify for loans.

- Bidart emphasizes that AI, when designed with intention, can foster fairness, efficiency, and inclusion, empowering millions of entrepreneurs like Maria and her own mother.