A Study on the Role of AI in Shaping Financial Confidence and Sustained UPI Usage with Reference to Tamil Nadu

Abstract

Digital financial transactions in India have changed the adoption of the Unified Payments Interface (UPI). Nonetheless, it is a tremendous challenge to maintain the engagement of users in the long term. With the adoption of digital payment systems that are becoming more and more based on Artificial Intelligence (AI), it will be essential to comprehend the impact of the AI functions on the financial confidence of users and their desire to use the platform. This paper will discuss how AI-driven security, AI-based personalization, and AI-enabled customer support can improve financial confidence, as well as lead to the continued use of UPI. The quantitative research design was used to collect data in the form of a structured, closed-ended questionnaire, among 387 respondents. The structural equation modeling (SEM) was used to establish the direct and indirect relationships between the constructs. The findings indicate that AI-based security (β = 0.342), AI-based personalization (β = 0.28), and AI-enabled customer support (β = 0.35) have a significant impact on enhancing financial confidence. Long-term UPI usage is strongly positively influenced by financial confidence (β = 0.471), which serves as an intermediary variable between the two variables (AI features and continued use). The results also expand the theory of technology adoption into the post-adoption stage, where financial confidence is one of the psychological factors in AI-enabled systems. In practice, the research proposes that the clear use of AI-based security, substantial personalization, and receptive customer services are essential to establish trust and guarantee sustained interaction with the users. The study can be of great help to banks, financial technology firms, and policymakers who aim to develop better digital payment systems in India and facilitate financial inclusion.