The Current Column

A Dual Disruption

The Future of Development Finance in Times of AI and Blockchain

Brandi, Clara / Max Büge
The Current Column (2026)

Bonn: German Institute of Development and Sustainability (IDOS), The Current Column of 27 April 2026

Bonn, 27 April 2026. AI and blockchain technology profoundly transform development finance. This was one of the key topics during the 2026 Spring Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG). What does this mean for the future of the development finance and its architecture?

The transfer of development finance rests, primarily, on two pillars: first, human and organisational expertise, and, second, financial flows intermediated through trusted organisations. Today, both elements are being profoundly reshaped simultaneously by disruptive innovations - expertise by AI and financial flows by blockchain-based payment and smart contract solutions.

Traditionally, development finance depends on the expertise of professionals in development banks, international organisations, ministries, and other local partners who design and evaluate projects, assess risks, and allocate know-how and capital, based on accumulated knowledge and (often imperfect) data.

First, by processing vast datasets, ranging from satellite imagery to real-time economic indicators, AI systems can generate insights that surpass human analytical capacity in speed and scale. For development finance institutions (DFIs), this creates both an opportunity and a challenge: they must transition from being repositories of expertise to becoming orchestrators of AI-enabled knowledge systems.

At the same time, the second pillar of development finance, financial flows, is undergoing an equally profound transformation. Up to now, capital flows in development finance have largely been intermediated through centralised institutions. Blockchain technology disrupts this paradigm by enabling decentralised, transparent, and immutable financial infrastructures. Through smart contracts, funds can be disbursed automatically when predefined conditions are met.

The most profound transformation emerges from the interaction between these two disruptions. AI reshapes how decisions are made, while blockchain reshapes how those decisions can be executed. Together, they create a new paradigm of development finance, where capital allocation and disbursement become - when the right checks and balances are in place - automated, data-driven and verifiable.

From pilots to scale: Successful good practices around the globe

Highly successful pilots around the globe are allowing a glimpse into this near future: For instance, the Central Bank of Brazil has been testing decarbonisation tokens. When satellite data confirms a reduction in CO₂ emissions, these are automatically paid out to smallholder farmers.

In Syria, German international cooperation has launched a successful pilot initiative to digitise salary payments for healthcare workers. Years of political instability have significantly weakened the country’s banking system. Traditional transfer methods are frequently linked to corruption risks, burdensome administrative procedures, lengthy delays and high transaction costs. Payments to more than 900 health professionals via a stable digital currency have proven to be a highly efficient alternative. Moreover, between 2022-2025, UNHCR has supported over 240,000 people, who were forced to flee, with blockchain-based payments, thereby increasing the speed, efficiency and transparency of aid delivery.

How development finance institutions can adapt

Crucially, the dual disruption does not diminish the importance of DFIs, it elevates it. DFIs must govern data, ensure accountability and regulate decentralised systems. This will fundamentally alter the development finance architecture.

Against this backdrop, we make three observations. In terms of organisational design, DFIs will evolve towards platform-based orchestrators connecting data ecosystems, stakeholder and partnership management and decentralised finance infrastructures. Second, human resource management in DFIs is likely to focus on a new skill profile that combines AI for routine tasks with human experience for nuanced-decision-making skills and multidisciplinary connective capacity. Third, DFIs will need to invest in partnership ecosystems and turn increasingly into platform hubs to co-create solutions with tech firms and data providers.

To conclude, development finance is entering a new era defined by a double disruption and this comes, of course, with risks. To name only some: AI can produce biases and hallucinations. This makes human-centered AI (or augmented intelligence) all the more important. When evaluating any blockchain solution (e.g. crypto currency, stable coin, central bank digital currency, smart contract), it is essential to look closely at the entire creation and governance chain: who designed and developed the protocol, who issues the assets built on it, who operates and maintains the network, what externalities are (e.g. energy use) and, ultimately, who uses it.

But we believe the outlook of the digital disruption is positive – if we prepare well: There are substantial gains in terms of efficiency and transparency to be made.

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Prof. Clara Brandi is Head of Department at the German Institute of Development and Sustainability (IDOS) and Professor of International Economics / Development Economics at the University of Bonn.

Dr Max Büge is a leading expert for AI and blockchain in finance. At GIZ, he manages an international project on digital finance for sustainability.

The opinions expressed are those of the authors and do not necessarily reflect those of their organisations.