As banks push AI, worry about worsening inequality follows - Roll Call

Banks, consumer advocates and think tanks are weighing in to federal bank regulators about potential pitfalls in the use of artificial intelligence and machine learning in making loan decisions. In responses to regulators' call for comments, many expressed interest in an increased use of AI and machine learning in the banking business, along with caveats about fair lending and unlawful discrimination concerns. FinRegLab, a Washington-based research group that says it has launched a broad inquiry into the use of AI in financial services, told the agencies that machine learning could be "transformational," as current gaps "increase the cost or risk of serving particular consumer and small-business populations using traditional models and data." At the same time, the predictive power of machine learning models can increase potential risks "due to the models' greater complexity and to their potential to exacerbate historical disparities and flaws in underlying data," FinRegLab said. AI and machine learning might amplify patterns of historical discrimination and financial exclusion through reliance on flawed data or mistakes in development.