AI and Your Money
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.
How Our Data Is Used
Have you seen the ads for “instant credit” — the ones that say “just click here and you will be approved for a loan in two minutes?” Have you been declined for a loan for a car, house or even a rental request through an online application?
Our money – our livelihood — is directly connected to artificial intelligence (AI). If you were denied a loan, there’s a good chance it was because AI was in charge. Let’s look into how that all works.
Let’s begin with our digital footprint. Remember, AI is based on our data. Our clicks, our online habits and behaviors create our digital footprint. This footprint is the key to everything related to our money and AI. Financial institutions such as banks, lending organizations and credit bureaus have access to our digital footprint through AI tools.
How AI Gets Involved
In the past, we would apply for a loan by sitting down with a banker, having a conversation about our needs, and describing any challenges that may have impacted our credit to date.
Today, the loan approval process is automated, based on algorithms, which are formulas, that are defined by the organization approving or denying our request. We don’t know what is in the formula. Does it decline people in certain zip codes? Does it decline people with certain credit scores?
Every time we apply for something new – a loan, a credit card, a new apartment – we give an organization permission to access our data.
Let’s say you are looking for a new house or apartment. Typically, you would go online, add the city or zip code of the areas you are interested in, and you are off to the races.
You will typically start receiving marketing ads for different ways to get a loan or to find a new place to live. Have you ever noticed those ads? Have you wondered why you are receiving ads for homes or apartments not in the area you are seeking?
You will start receiving these ads based on your digital footprint – your behavior online. For example, because of my behavior online and because of my friend groups online, the AI ad formula – the algorithm – might start sending me ads for predominantly Hispanic neighborhoods simply based on my data. But, maybe I want to live in a cabin in the forest?
Is this discriminatory? Yes, and here is where AI needs to get better. The AI tools used by financial institutions can discriminate against people of different socioeconomic levels and lead them to poor lending options as an example.
Did you know that the AI behind your loan or credit application will know how many mistakes you made on the application and how many times they were corrected? It will know where you live, where you shop, your bill payment history and more…if you can believe it.
Yes, all of this happens in the “two minutes” the ad promised to loan approval.
If you are a person with a disability, it may take you longer to complete the form. You may make more mistakes. But the AI tool doesn’t know that you are disabled. The result of these circumstances is that you may get a “loan denied” message in the two minutes the ad promised and never know why.
The point here is to highlight the interconnected web of activity we create with each click. Our online activity impacts more things than we realize. Yes, believe it or not, clicking on a certain type of clothing or restaurant sends clues to the AI trying to figure you out.
When it comes to AI and your money - it all comes together.
If you have had a negative experience with online loan applications, home sales sites, credit applications – we have a resource to share. We recommend you visit the National Fair Housing Alliance (NFHA.org). This organization is doing the hard work behind the scenes to protect marginalized communities from being discriminated against when it comes to our money.
Once again, it all comes back to our digital footprint. Be aware of the two minute loan applications – they see much more than you think.
Algorithm: An algorithm is a set of rules or step-by-step instructions written by a programmer to be followed by a computer or artificial intelligence program in order to solve a problem or perform an action. An algorithm is the manualinstructing the AI what to accomplish.
Artificial intelligence: A computer system or program that performs tasks that ordinarily a human would perform.
Fraud detection: The process used to prevent money from being stolen online.
Risk assessment: The evaluation of risks to determine whether a project or loan is worth doing.
Unconscious bias: The prejudices a person may have without realizing it. Bias in AI can negatively impact marginalized communities.