Ethical Considerations for AI in Banking and Finance

At Future Workforce, we help businesses in the banking and finance sectors to adopt AI and enhance their everyday operations. To get you started, we’re going to talk about AI ethics: what they are, why they’re important, how they align with ethical considerations, and the ability of AI to perform its own ethical governance.

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What are AI Ethics?

AI ethics are a set of guiding principles that determine how AI should be made and used. Without the proper ethics to support it, AI can end up producing a lot of undesirable and unpredictable results. As such, following AI ethics and guidelines are important for people across all stages of the product lifecycle, including:

• Engineers, who follow them when creating AI
• Project managers, who follow them when deciding the direction of a project
• Governments, who follow them when setting regulations

As they can be applied in different ways across various sectors for different stakeholders, AI ethics is a hard subject to pin down. However, it is incredibly important to understand – especially in banking and finance.

According to IBM, a document known as the Belmont Report is used to guide academic research and development of AI algorithms and ethics. As well as this report, there are general guidelines to follow which can help your solution be effective and compliant.

When you’re creating your AI ethics guidance, there are some key features to consider to make sure your AI ethics is as strong as possible. These include:

• Avoiding bias
• Ensuring user data privacy and protection
• Lowering environmental hazards (of data storage and energy costs)
• Preventing harmful information from being obtained (e.g. details on how to commit crimes)
• Creating AI with the intent to fulfil the user’s needs

AI should be helpful, and never harmful. These principles will ensure your AI is best aligned with the wishes of your customers, making it the most useful for them while also helping you see greater returns.

Ethical considerations for AI can be applied on a personal, local, national, or even global scale. Understanding where you sit on this will help you determine how many resources to invest into the project, as well as any additional considerations based on the location and magnitude of your userbase.

By following AI ethics, you can help to determine your policies around AI implementation, follow government regulations for data handling and AI use, and support your customers to achieve a better experience for banking and finance.

Why are AI Ethics Important for Banking and Finance?

AI ethics are what holds AI to its high standards. Banking and finance are fast paced, involve lots of sensitive data, and are incredibly important to people. As such, following AI ethics is a vital part of using AI – or adopting any new technology in these sectors.

Here are the top things to watch out for:

• Inaccuracies. These lead to poor customer experiences or harmful decision making.
• Biased data. This can portray things as fact, such as advice for a particular investment route, when the reality is that other options are available.
• Data privacy. An important part of banking and finance is proper handling and management of user data, as a lot of sensitive information is being handled. To comply with regulations and protect your customers, data needs to be kept both private and secure.
• Harmful information. While harmful information is less prevalent in banking and finance, you still need to ensure your AI doesn’t give harmful advice to people that could result in illegal actions, such as telling them how to commit tax evasion.

As well as the problems caused from AI that hasn’t been built to a proper code of ethics, not following ethical considerations can lead to issues during development.

Without the proper foresight, AI can be made with flaws that damage the user experience or cause it to not align with regulations – wasting time and money on a product that isn’t fit for use. AI ethics, and the guidelines they result in, work to ensure proper deliberation, leading to a better-quality end result.

Different Ethical Considerations for Banking and Finance

When you’re creating or employing an AI in your banking or finance processes, you need to be aware of the different ethical considerations. Without following these, your AI could go rogue and end up causing more harm than good to your business and your customers.

The three most important ethical considerations for banking and finance are:

1. Algorithmic Bias

Algorithmic bias refers to an either hard-coded preference, or a learned one based on the data sets an AI interacts with. Bias can be avoided by informing the AI with a wide variety of balanced data, and then testing the fairness of its outputs.

2. Security Risks & Privacy Violations

Since it has access to a lot of data, and interacts with many different customers, AI could in theory end up giving away information to someone who isn’t supposed to receive it. Proper restrictions need to be put in place to stop AI from giving away any data it shouldn’t, and to stop bad actors from manipulating your systems for their own gain.

Learn more about AI compliance for banking and finance >

3. Lack of Transparency

AI tends to beat around the bush, which isn’t useful in a highly precise industry like banking and finance. When your customer is handling large amounts of money to exact timeframes, they need to be sure the advice and support they receive is accurate. AI tools that are used during these processes therefore need to demonstrate data and insights in a clear, concise, and transparent fashion.

Ethical Governance with AI-Powered Solutions

Ethical governance refers to conduct in a given situation. While it’s imperative to have good ethical governance for AI creation, it is just as useful to employ AI-powered solutions to provide oversight for conduct and content from humans.

As AI is able to pull from a vast amount of data, it has no problem learning and digesting ethical governance guidelines. The strong pattern recognition skills of AI can then apply this knowledge to various scenarios, leading to better oversight.

The human element still isn’t lost, however; any ethical governance done by AI should still be double-checked by a person. AI isn’t perfect, and its interpretation of a scenario might differ from a more experienced human.

By cutting down on the time taken to review work, and increasing the accuracy of the ethical practices within it, AI-powered solutions allow more efficient and effective communications and activities for banking and finance.

Ethical AI for Banking and Finance from Future Workforce

AI ethics prevent your AI from causing harm to your customers, while also increasing the quality of outputs it can produce. It is important to understand what AI ethics are, and to create a framework which can inform all stakeholders at every stage of development and use.

At Future Workforce, we have specific experience in delivering AI solutions that empower banking and finance businesses to achieve their full potential. Get in touch today to find out more!

See our case study on how we helped a bank reach their customers quickly and cost-effectively >