AI and Your Money
Description:
During this module we review the technology behind loans and other applications that use our data, and discuss what you need to know about the application process. We also discuss bias in artificial intelligence (AI) and the development of inclusive AI to create more equity with loans and other financial services.
AI and Your Money Video Transcript
When you see a phrase, “click here now online”, do you click here now? As a general rule, probably shouldn't. Today, we will be talking about how this happens and what you can do to avoid it. Let's say you want a loan to buy a car. So you go online, you browse around, and you see an ad that promises that if you “click here now”, you could be approved for loan in two minutes. So you fill out the forms and so on and so on.
And mere seconds later, You're told you were denied a loan. Is that a scam too? Believe it or not, it's no scam. It's Artificial Intelligence doing the job of humans in record time. But it's also Artificial Intelligence not getting everything exactly right. Let me explain.
We've talked about our digital footprint before. Our clicks, our online habits, our data. All of that is our digital footprint. And all of it is available to anyone who wants it, like banks, lending organizations, credit bureaus, and so on. And when these institutions get their hands on our data, the first thing they do is give it to their AI tools.
It used to be that when you applied for a loan, you sit down with a banker, discuss your needs, describe your credit challenges, and so on. Well, that's in the past. Today, the AI can dig into your data, find out where you live, where you shop, your bill payment history, and more. The best way to avoid a scam that may quickly decline your request for a loan is to do some research online and find the financial institutions that are stating their commitment to inclusion in their lending practices.
Try not to click when you see an ad promising loan within two minutes, do your research. Find the most inclusive financial institutions. They're out there. Did you know that the AI behind a loan application or credit application will know how many mistakes you made and how many times you corrected those mistakes? This is a problem.
If you're a person, let's say with a disability, it might take you longer to fill out an application. You may make more mistakes. Does the AI know you are disabled? Probably not. Did the AI see that you checked woman, Latino, or African American and decided you weren't worthy of a loan? It's very possible. All of this in two minutes?
Today, the loan approval process is completely automated based on algorithms, which are formulas that are defined by the lending institutions, such as banks and instant credit websites. The question becomes, What is it about your data that the AI didn't like? What's in that formula or algorithm that made the decision without knowing you personally? The short answer is that you don't always know. Maybe you didn't get a loan because you live in a certain zip code. Maybe you didn't get a loan because your credit score was too low. Maybe the reason you got denied a loan wasn't fair.
But how could AI make an unfair decision? Computers don't make mistakes, right? That's right. Computers don't make mistakes. But computer programmers do. What we're talking about here is sometimes called unconscious bias, or prejudices that a person can have without fully realizing it. The AI tools that financial institutions use are often programmed by people with unconscious biases.
Meaning they can discriminate against people of different socioeconomic levels, or in worst cases, ethnicities or genders. This can lead to people who should be qualified for a loan receiving terrible loan options or outright rejections. I know, this is pretty disturbing stuff. AI has a long way to go still, but the good news is, people are working in creating more inclusive AI that won't discriminate.
But be aware, ask questions, and if you think you're being unfairly treated when applying for a loan online, there is a great resource called the National Fair Housing Alliance, and you can find them at nationalfairhousing.org. They're also known as NFHA is doing great work to protect communities from discrimination when it comes to our money.
Be aware of the commercials and ads that suggest you could be approved for a loan in two minutes. Think before you click.