Explainability-Driven Differentiation: Responsible AI as a Trust Catalyst in Digital Banking Ecosystems
DOI:
https://doi.org/10.15662/IJRAI.2025.0803009Keywords:
An explainable AI, Responsible AI, Digital banking, Trust, Ethical AI, Customer Engagement, AI Governance, Transparency, Bias Mitigation, AI Accountability, Financial technology, Decision Interpretability, regulatory complianceAbstract
The recent pace of adopting Artificial Intelligence (AI) in digital banking has unlocked previously unseen efficiencies, although has come at the cost of the transparency, accountability, and user trust. The framework proposed in the paper is called Explainability-Driven Differentiation (EDD), within which Responsible AI is one of the major force behind enhancement of the trust in the digital banking ecosystem. The proposed framework brings together explainable AI (XAI) practices, governance of the ethical models, and adherence to the AI lifecycle in terms of the interpretability of each part of the decision-making process. Some of the key components include: (i) Model Explainability Layer, which exposes the capability to provide explanation of AI-based decisions to end-users and stakeholders in an engaging and real-time manner; (ii) Ethical Oversight Module, which includes the provision of bias mitigation, fairness, and industry standards-compliant system; and (iii) Trust Feedback Loop, providing reporting of the perception of users and dynamically adjusts AI interactions. The framework was used when evaluating a case study on a large digital bank proposed a credit scoring model and tailored recommendation framework. Measures like user trust perception, model transparency and decision accuracy were evaluated. Findings show that the user trust ratings were increased by 32% and the percentage of disputed AI decisions went down by 21% with the implementation of the EDD framework. In addition, the explainability mechanisms proved to be more engaging to customers and decreased the number of compliance-related inquiries, which are clear business and ethical advantages. The paper emphasizes the fact that the responsible AI principles or the explainability, in particular, can become one of the aspects of the digital bank that becomes a distinguishing factor, supporting the long-term relationships between the bank and the customer and the competitive edge. The EDD model provides a flexible model that can be followed to introduce AI transparency and ethics, thereby enabling responsible innovation in the financial sector.
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