  This paper explores the dual impact of digital banks and alternative lenders
on financial inclusion and the regulatory challenges posed by their business
models. It discusses the integration of digital platforms, machine learning
(ML), and Large Language Models (LLMs) in enhancing financial services
accessibility for underserved populations. Through a detailed analysis of
operational frameworks and technological infrastructures, this research
identifies key mechanisms that facilitate broader financial access and mitigate
traditional barriers. Additionally, the paper addresses significant regulatory
concerns involving data privacy, algorithmic bias, financial stability, and
consumer protection. Employing a mixed-methods approach, which combines
quantitative financial data analysis with qualitative insights from industry
experts, this paper elucidates the complexities of leveraging digital
technology to foster financial inclusivity. The findings underscore the
necessity of evolving regulatory frameworks that harmonize innovation with
comprehensive risk management. This paper concludes with policy recommendations
for regulators, financial institutions, and technology providers, aiming to
cultivate a more inclusive and stable financial ecosystem through prudent
digital technology integration.
