As Banks Push AI, Concern Over Worsening Inequality Follows

The legal center noted that there is not even an agreement on the definition of “artificial intelligence”, which adds to concerns about how it is used.

“The lack of a definition of AI is understandable, but it’s also problematic,” the group wrote. “There may be mistaken assumptions that the use of AI necessarily makes a system more accurate or predictive, or that it is impartial and unquestionably fair.”

The pro-consumer legal organization said that public perception of what constitutes AI has been heavily influenced by Hollywood with films such as “2001: A Space Odyssey” or the Terminator series. “Many think AI is incredibly human and sensitive, which is a far cry from today’s reality,” he said.

State Street Corp., one of the largest banks in the United States, with nearly $ 317 billion in assets, told regulators that, in its experience, models of AI and machine learning may face data quality issues, including biases introduced by data that is mislabeled or embedded in the data provided. by a third party supplier.

“Difficult question to settle”

Jo Ann Barefoot, former deputy currency controller and staff member of the Senate Banking Committee who now heads the Alliance for Innovative Regulation in Washington, said there were many possible benefits of using AI in underwriting credit. But regulators need to ensure that banks comply with fair lending laws and that machine learning does not result in denial of credit for prohibited reasons such as race and gender, she said. .