International Journal For Multidisciplinary Research

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A study on AI in Indian fintech : Ethical concerns, data protection, and consumer trust

Author(s) Gauri Anil Sharma
Country India
Abstract Artificial intelligence (AI) is rapidly being integrated into Indian fintech firms, fundamentally changing how financial services are delivered, making them more efficient, easier to access, and improving customer experiences. The introduction of AI technology-based innovations like automated credit scoring and fraud detection and personalized financial advisory services has all changed the way the finance industry operates; however, with these advancements come various ethical issues related to data protection, algorithm transparency, bias in algorithms, and consumer trust. This research will explore ethical challenges posed by the use of AI within Indian FinTech firms, with a focus on the areas of data privacy, fairness, accountability, and trust-building mechanisms. With the increasing amount of personal and financial data being stored by firms in these industries, consumers are becoming increasingly concerned about issues surrounding consent and improper use of data and misuse of data, and the need for more protection of consumers' rights regarding data security, as there are no extensive guidelines regarding how companies should store consumer’s data.
The Reserve Bank of India has also supported the statement above, indicating that responsible adoption of AI technology is important by authors of AI technology-based documents by creating their Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) document to create a balance between the creation of innovative technology and responsible governance of the ethical implications of using these technologies. Moreover, the research examines the issues surrounding algorithmic bias and lack of transparency regarding AI decision-making processes, which can result in discriminatory outcomes for consumers as well as reduced levels of accountability. These issues have a direct effect on how trustworthy consumers view the financial services they use, and without consumer trust, it will be impossible to establish a healthy financial system. As AI continues to develop into more automated systems, it will be critical to ensure that they maintain their ability to explain their decisions and maintain fairness and integrity in order to build user confidence and comply with existing regulations.
This research uses qualitative analyses of secondary data obtained from regulatory reports, published academic sources, and applicable industry practices to evaluate the ethical challenges associated with the implementation and usage of AI within the FinTech industry in India. While the results show that AI will provide significant benefits, such as improving access to financial services for previously unimpeded populations and increasing operational efficiency for organizations providing these services, if the development and implementation of AI are not conducted using adequate ethical protections, the potential for consumers to trust a financial services provider will evaporate and result in a negative impact on India's overall financial system. This paper concludes that a well-balanced approach involving the creation of strong regulatory processes, ethical designs for AI, compliance with data protection laws, and holding all stakeholders accountable is essential for the long-term success of AI-driven FinTech in India.
Keywords Artificial l Intelligence (AI), FinTech, Ethical Issues, Data Privacy, Consumer Trust, Algorithmic Bias
Published In Volume 8, Issue 3, May-June 2026
Published On 2026-05-05
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E-ISSN 2582-2160
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