ANALYSIS: What Lenders Should Know About AI and Algorithmic Bias

The recent craze over artificial intelligence, and its ever-increasing accessibility, may encourage new technological advancements in the loan industry. But while AI-driven lending strategies could increase access to credit in underserved communities, its propensity for algorithmic bias can also lead to lending discrimination lawsuits.

Right now, there are no antidiscrimination laws that specifically address the use of AI in lending. But that doesn’t mean creditors can skirt their responsibilities under existing laws just by blaming their algorithms. Discrimination lawsuits are being filed nonetheless—including in the lending industry itself—singling out AI as the culprit.

Algorithmic Bias and Lawsuits

Algorithmic bias generally ...