AI Can Enhance, or Reduce, Racist Lending

Plus, Revolut is really pushing it.

Number of the Week: 3 (explanation below)

AI Can Enhance, or Reduce, Racist Lending

Artificial intelligence (AI) is such a red-hot topic these days that it’s surprising how little is written about how it applies to the banking and fintech worlds. FIN has addressed the topic in the past, but this week there is a regulatory peg that provides a useful opportunity to reexamine AI.

There are effectively no U.S. federal regulations that pertain specifically to artificial intelligence; the technology is relatively new (though the building blocks of AI date back to the 1950s), and despite some recent AI guidelines from the Biden Administration, it’s not clear that a legally binding definition of AI even exists.

Nonetheless, banking and finance is a heavily regulated industry, and AI can be theoretically controlled based on its impact, as opposed to its underlying technology. This week, the Consumer Financial Protection Bureau (CFPB) issued guidance about the use of AI in denying consumers credit.

Here’s what’s at stake.