AI Fairness in Financial Services: Trust at the center

By Alexandru Giurca / July 2020

Financial institutions are rapidly embracing Artificial Intelligence (AI) in their day to day operations in many different areas ranging from HR and fraud detection to credit scoring and trading. Some applications of AI, such as hiring and loan decisions, can be highly sensitive to the so-called protected attributes such as gender or race. Particularly in these areas, where AI is increasingly evolving, fair treatment of individuals must be assured.

It is well known that AI applications introduce new risks by exhibiting significant biases – possibly unintentionally discriminating against individuals. Examples of such biases have recently reached the mainstream media and a powerful consensus is emerging among policymakers regarding principles for the ethical and fair application of AI. Algorithms might amplify societal inequities represented in the data. To avoid reputational damage, as well as to comply with recent regulation regarding AI fairness, financial institutions must ensure they recognize and mitigate these biases when applying AI.

This paper is intended to be a starting point in understanding why AI ethics has to be regarded also as a board level issue and why assuring fairness in AI models is a complex process that requires both, technical as well as business considerations. Financial institutions must establish a cross-functional AI governance framework covering the notion of fairness in the entire AI lifecycle. Further, concepts of ethics and fairness need to be incorporated in existing Model Risk Management practices.

Probability & Partners has a long-standing operational expertise in building and deployment of AI models. We provide guidance on ethical considerations in AI model development and model risk management and advise you on the optimal balance between model performance and fairness. Further, we assist in reviewing your AI governance framework and help you to embrace trustworthy AI in order to harness the full potential of these powerful new technologies.