Artificial Intelligence: Fair Lending Considerations

Summary

This practice note will explore the expansive use of AI and ML in consumer lending, examine the regulatory landscape, and provide some best practice recommendations. The integration of Artificial Intelligence (AI) and machine learning (ML) into consumer lending has been transforming the financial services landscape. Lenders are increasingly leveraging these technologies to enhance underwriting processes, customer interactions, and lower costs. However, this rapid adoption brings forth significant legal and ethical considerations that lenders must address before leveraging AI and ML. While AI and ML offer the promise of unbiased, data-driven decisions, they can inadvertently perpetuate or even exacerbate existing biases present in the data they are trained on. Issues such as unlawful discrimination, disparate impact on protected classes, and breaches of privacy, have drawn the attention of regulators and legislators alike.