The news: UK regulators have signaled that they will clamp down on artificial intelligence (AI) use in banking that might be used to discriminate against people, per the FT.
Banks which use AI to approve loan applications must be able to prove the tech will not worsen discrimination against minorities.
The bigger picture: AI is a significant growth area in banking. Its market size is projected to soar globally from $3.88 billion in 2020 to $64.03 billion in 2030, with a CAGR of 32.6%, per a Research and Markets report.
AI in banking is maturing, and as data analysis improves, it brings the potential for more accurate decision-making. But concerns about misuse have led to heightened regulatory scrutiny:
The problem: Banks using AI need to be aware of the risks that come with the technology:
The solution: Clear and consistent guidance from regulators will give banks a framework to work within, helping them to minimize potential problems arising from AI use. Banks must recognise the inherent flaws in AI, improve transparency, and take responsibility for problems. Both banks and watchdogs must introduce policies to minimize the risk of bias and discrimination:
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