As previously discussed, financial services regulators are increasingly focused on how businesses use artificial intelligence (AI) and machine learning (ML) in underwriting and pricing consumer finance products. Although algorithms provide opportunities for financial services companies to offer innovative products that expand access to credit, some regulators have expressed concern that the complexity of AI/ML technology, particularly so-called “black box” algorithms, may perpetuate disparate outcomes. Companies that use AI/ML in underwriting and pricing loans must therefore have a robust fair lending compliance program and be prepared to explain how their models work.
For all the talk of artificial intelligence and the benefits to be found in the related field of machine learning, there are also plenty of practical issues that companies on both sides of the vendor/client relationship will need to resolve. We recently examined one of these questions in the post, “Come Harvest Time, Who Owns the Fruits of Machine Learning” on Pillsbury’s SourcingSpeak blog.