A new report from a financial technology expert at the Bank of England says that inherent biases in AI systems makes it dangerous to entrust them with too much decision-making at present. Credit: Shutterstock The implicit bias of present-day generative AI models make their rapid adoption in the financial sector hazardous, according to a report by a financial technology expert working for the Bank of England. Kathleen Blake’s report, published Wednesday, splits AI model bias into two categories — bias based on underlying training data, and bias based on the results of model output. Although both reflect the human biases that developers and creators bring to AI models, the former category is impossible to counteract just by getting rid of data points that indicate, for example, femininity or non-whiteness. Blake likened data bias to the practice of redlining in mortgage lending. In a redlining system, home insurers and mortgage lenders assess non-white customers as “risky” based on their neighborhood, making credit and insurance more difficult to come by for people of color, while not directly attributing denials or higher prices to race. Similar logic is already visible in AI systems, Blake noted. “[T]he model may make underlying correlations that lead to biased decision-making based on non-protected features,” Blake wrote. “In other words, the remaining, non-protected features could act as proxies for protected characteristics.” Societal bias, by contrast, is “where norms and negative legacy from a society cause blind spots.” Blake cited an Amazon recruitment algorithm that tended to recommend more male candidates than female, because the data, historically, showed that males tended to be hired more often. AI bias is particularly dangerous in the financial sector, Blake warned. Trust in the banking system is at serious risk from the aforementioned biases displayed by AI, given that (while noticeably less discriminatory than human decision-makers), AI still charged higher rates to Black and Latinx mortgage customers when compared white ones. Moreover, the opaque “black box” nature of proprietary models means that, if a large group of important firms uses them for similar purposes, their actions could have a huge effect on the economy as a whole, and be fairly unpredictable into the bargain. Blake acknowledged that this type of destabilizing AI event hasn’t happened yet, but warned that the risks are very real, citing a 2021 case in which Apple and Goldman Sachs were investigated by the New York State Department of Financial Services for algorithmically offering smaller lines of credit to women. “Beyond the inherent issues with bias, fairness and ethics, this could potentially lead to stability issues for financial institutions or the financial system as a whole,” Blake wrote. Related content feature Windows 11 Insider Previews: What’s in the latest build? Get the latest info on new preview builds of Windows 11 as they roll out to Windows Insiders. Now updated for Build 22635.3566 for the Beta Channel, released on April 26, 2024. By Preston Gralla Apr 26, 2024 251 mins Small and Medium Business Microsoft Windows 11 news Dropbox adds end-to-end encryption for team folders Dropbox this week unveiled a range of features, including security updates and key management, and the ability to co-edit Microsoft 365 documents from within the file-sharing app. By Matthew Finnegan Apr 26, 2024 3 mins Cloud Storage Collaboration Software Productivity Software feature Android versions: A living history from 1.0 to 15 Explore Android's ongoing evolution with this visual timeline of versions, starting B.C. (Before Cupcake) and going all the way to 2024's Android 15 (beta) release. By JR Raphael Apr 26, 2024 23 mins Small and Medium Business Smartphones Android news analysis The unspoken obnoxiousness of Google's Gemini improvements Google's Gemini chatbot is seeing all sorts of upgrades on Android this week, but those advancements reveal a darker underlying reality. By JR Raphael Apr 26, 2024 12 mins Google Assistant Google Android Podcasts Videos Resources Events SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe