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    United Business OutlookUnited Business Outlook
    Home»Business»UK regulators warn banks on use of AI in loan applications

    UK regulators warn banks on use of AI in loan applications

    Cultural groups have historically struggled to obtain affordable loans.  AI would not make the same biased and unfair decisions that humans do.
    Aditi GuptaBy Aditi Gupta2 Mins Read Business February 16, 2022
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    UK regulators warn banks on use of AI in loan applications
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    UK financial regulators have warned banks to consider using artificial intelligence.

    This comes after concerns that the AI might pick up ethnicity discrimination. It is common knowledge as minorities are having a tough time getting their bank loan applications approved.

    Thereby, the banks can use AI technology, only if they can prove that it won’t discriminate against minorities.

    Observers and regulatory authorities are pressing Britain’s largest banks.

    High-street banks in the UK are looking into ways to automate more of their lending.

    This includes the use of artificial intelligence (AI) and more advanced algorithms. This will help to decide who to lend to based on historical data, on different types of borrowers.

    UK Banks believe that using machine learning techniques to make loaning decisions will reduce discrimination.

    UK regulators warn banks on use of AI in loan applications
    Artificial intelligence can make or break the economic system. (Image Source: Pixabay)

    Cultural groups have historically struggled to obtain affordable loans.  AI would not make the same biased and unfair decisions that humans do.

    “The banks would like to get rid of the human decision-maker because they perceive, I believe correctly, that that is the main source of bias,” said Clifford Chance lawyer Simon Gleeson.

    However, regulators are concerned that the use of AI in credit models will have the opposite effect.

    In the past, there have been cases where data caused a problem.

    Hence, making them even more likely to default. Using AI can make this even worse

    Last year, the chairs of two US congressional committees urged UK regulators to ensure that the country’s largest lenders applied safeguards.

    Recently, the EU’s financial regulators asked lawmakers to consider further analyzing the use of data.

    An old government review has come to light.

    However, UK banks are lending less to ethnic minorities.

    In order to prevent AI-led lending from being misused. UK regulators are focusing on issues such as built-in safeguards.

    AI Artificial Intelligence Bank of England Business news Ethnicity Minorities UK
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    Aditi Gupta

    A writer and a photography enthusiast, with a zest for reading and traveling. Wants to bring change to the world, and when not editing, she spends her time on the guitar.

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