UK financial regulator warns banks against using AI technologies17. February 2022
UK financial regulator warns banks against using AI technologies
London, Feb. 17, 2022
UK financial regulators have warned banks against using AI technologies that show bias in loan applications. The background: regulators are concerned that automated lending services could discriminate against minorities when it comes to borrowing.
To determine who gets a loan, banks are increasingly relying on advanced algorithms based on historical data such as zip codes and employment profiles.
However, British regulators and campaign groups say AI risks perpetuating stereotypes because it relies on a complex “cocktail” of Big Data that can unfairly categorize people into certain groups and reinforce historical biases.
According to the Financial Times, some banks believe AI could actually reduce racial discrimination because it does not have the inherent “subjective” biases that humans have. Alarmed by various cases, EU financial regulators recently called on lawmakers to analyze how data in AI/ML models creates bias that can lead to discrimination and exclusion in digital finance.
The Consumer Financial Protection Bureau also now wants to know how they can avoid using AI and algorithmic decision support to discriminate against consumers in banking.