Saifr, a RegTech firm, recently took the time to outline what it sees as the seven elements of ethical AI.
The advent of artificial intelligence (AI) heralds transformative prospects, especially within the financial sector where companies must pivot towards innovation or risk obsolescence. However, the FinTech industry grapples with the challenge of integrating AI while adhering to stringent regulatory and compliance demands.
The European Commission’s foresight in assembling a 52-expert panel on AI to prescribe a set of guidelines for trustworthy AI is a boon for the industry. The report underscores AI’s tripartite foundation: it must be lawful, ethical, and robust. Building upon these, seven specific ethical considerations are proffered to guide AI implementation, with a marked emphasis on ethics and robustness.
In this exposition, we delve into the seven ethical elements posited by the guidelines, offering insights into their practical application in FinTech.
The first ethical pillar is human oversight. As the EU posits, human intervention should be integral to AI’s lifecycle to ensure its benign evolution. A pertinent example is a machine learning firm that collaborated with a multinational bank to enhance its anti-money laundering probes. The synergy between the bank’s staff and the AI company’s data scientists fostered an AI model that adeptly identified opaque transactional patterns, ultimately earning a global deployment nod post regulatory vetting.
Secondly, AI’s technical robustness and safety are paramount. Unexpected adversity is inevitable, and AI systems must be equipped to handle errors and invalid inputs. For instance, an error at a credit reporting firm erroneously altered credit scores by up to 25 points—a testament to the high stakes in financial data integrity. Ensuring reliability involves implementing fallback strategies, rigorous technical training, regular system testing, and engaging external AI solutions for accuracy and analytics.
The third consideration is privacy and data governance. The establishment of governance frameworks is crucial to safeguard customer data. Increasingly, companies are enlisting Chief AI Officers to mirror industry best practices in their policies, enhancing customer trust and business success.
Transparency constitutes the fourth ethical element, where AI decisions are demystified for customer understanding. This clarity is particularly vital as chatbots become commonplace in investment platforms, necessitating explicit communication that users are engaging with robo-advisors.
Addressing the fifth element, diversity, non-discrimination, and bias mitigation, AI must cater to a heterogeneous clientele to preclude inherent bias. This entails embracing inclusivity, ongoing development oversight, and the promotion of diverse data sets to diminish bias risk.
The penultimate element highlights societal and environmental well-being. AI should be designed with sustainability in mind, aligning profitability with corporate social responsibility and long-term societal benefits.
Finally, accountability is crucial. Ethical AI necessitates frameworks to address breaches and prevent adverse consequences, delineating clear liability in company policies.
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Copyright © 2023 RegTech Analyst
Copyright © 2018 RegTech Analyst
