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 news analysis Apple reports on its forever war against App Store fraud Apple prevented over $1.8 billion worth of potential fraud in 2023 alone — that’s up 20% in four years. By Jonny Evans May 14, 2024 6 mins Apple Mobile Apps Application Security news Microsoft looks to ease the shift to hybrid work with its Places app The company is one of several software vendors that have identified the difficulty of coordinating flexible work patterns; Places is positioned as a tool that can encourage more in-person interactions. By Matthew Finnegan May 14, 2024 4 mins Remote Work Microsoft 365 Microsoft news Adobe introduces AI assistant to help enterprises exploit data held in PDFs Rather than read through long documents, workers will be able to ask questions of them using Adobe’s new Acrobat AI Assistant for enterprise. By Sascha Brodsky May 14, 2024 5 mins Generative AI Productivity Software news Google: Project Starline 3D meeting platform arrives next year Google partnered with HP to commercialize 3D video meeting technology designed to replicate the feeling of face-to-face conversations for remote workers. By Matthew Finnegan May 14, 2024 3 mins Google HP Collaboration Software 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