How A New Artificial Intelligence Investor Guide Can Help Financial Tech Companies Eliminate Gender Bias in their Algorithms

Fueled by large amounts of consumer data and the use of digital devices around the world, artificial intelligence (AI) systems are increasingly influencing high-stakes financial decisions—determining our economic prospects as individuals, businesses, and communities.?

From running financial virtual assistants to supporting credit scoring and fraud detection, AI systems can create opportunities for better, more personalized financial services.?

On the other hand, these tools can introduce new, potentially severe risks, including data privacy violations and unfair outcomes for different consumer groups.?

Women have already experienced the negative effects of automated financial systems. For example, women have encountered more frequent credit rejections compared to their male counterparts, higher prices or lower spending limits, and received limited choices for financial solutions. These decisions, often perpetuated by underlying datasets that misrepresent borrowers' diversity, are not only bad for business—they contradict the financial inclusion goals shared by many governments and the private sector.?

Innovative financial technology companies or “fintechs” provide some hope for mitigating these challenges and addressing long-standing biases in the financial industry. Still, many of these early-stage companies depend on impact investors—key stakeholders who impact the trajectory of how the financial industry designs AI-powered financial services for vulnerable populations.?

Despite their potential to influence how AI systems are created and deployed, impact investors may not have the expertise or tools to assess how their investments are accounting for potential algorithmic biases. Recognizing this gap, the Center for Financial Inclusion, in partnership with USAID and DAI’s Digital Frontiers under the Equitable AI Challenge, crafted a guide to support impact investors in better understanding and assessing their fintech investees to ensure they prioritize equitable AI.?

USAID continues to encourage the private sector to address some of AI’s critical issues, stressing the importance of transparent financial solutions that support women entrepreneurs and smaller businesses alike.

New Investor Guide Can Shape Fintech Approaches to Inclusive AI

The recently released Investing in Equitable AI for Inclusive Finance Guide details the risks and costs of utilizing inequitable AI tools, provides guidance on how to measure fairness, and encourages strong data usage and governance practices.

How does all of that work in the real world??

First, investors need to understand how bias can creep into AI systems. Then, it is important to understand the business case for investing in equitable AI. With this information, lenders can take critical steps to mitigate, monitor, and correct bias and fund bias mitigation efforts—mutually benefiting both businesses and end-consumers.

Algorithmic bias is not always evident. While there are dozens of recorded cases of algorithmic harm impacting women from the United States and Europe, there are few examples from emerging markets. As a result, many investors are unaware of the risks specific to women and other marginalized groups in these geographies. This is particularly relevant as many fintechs build tools to specifically reach these growing economies. Furthermore, fairness is difficult to measure as there is no universal definition or standard for the development of AI.?

While operationalizing equitable AI remains an ongoing challenge, it should not deter the financial sector from committing to do the work.

This guide is intended to be a critical step for addressing some of these challenges. It is also designed to fit into existing lending processes—supporting investor-level stakeholders in a high-paced, high-stakes field. It is also built for and accessible to impact investors without data science backgrounds.?

The guide, made possible through USAID’s Equitable AI Challenge, is a starting point for investors and donors to build mutual understanding around what equitable AI looks like. By pursuing these exchanges, building transparent technology solutions, leveraging innovative businesses, and fostering meaningful partnerships, the financial industry can embrace responsible AI and propel financial inclusion.?

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ABOUT THE AUTHOR: Alexander Riabov, Senior Communications Specialist, DAI’s Digital Frontiers