(American Banker / LendItFintech) - Rohit Chopra, the director of the Consumer Financial Protection Bureau, has cautioned banks, credit unions and fintechs about fair-lending violations that may stem from reliance on artificial intelligence.
His comments threaten to discourage financial firms from using the technology to crunch nontraditional data about borrowers, experts say.
Rohit Chopra has seized on nearly every public opportunity as director of the Consumer Financial Protection Bureau to admonish companies about the potential misuse of artificial intelligence in lending decisions.
Chopra has said that algorithms can never "be free of bias" and may result in credit determinations that are unfair to consumers. He claims machine learning can be anti-competitive and could lead to “digital redlining” and “robo discrimination.”
The message for banks and fast-moving fintechs is loud and clear: Enforcement actions related to the use of AI are coming, as is potential guidance tied to what makes alternative data such as utility and rent payments risky when used in marketing, pricing and underwriting products, experts say.
By Kate Berry
January 31, 2022
