Do you work in the banking industry? Keep reading to learn more about the new artificial intelligence solution, Explainable AI (XAI), that is increasing customer trust, removing biased systems, and quickly transforming the industry for the better.

What is AI?

You may know that artificial intelligence, or AI, is used in the banking industry but aren’t actually sure what it is. In simple terms, artificial intelligence refers to the ability of a computer to perform tasks that would normally require human intelligence. Everyday examples of AI include opening your phone with face ID, friend suggestions on social media, and your email’s spam folder.

Artificial intelligence is meant to be similar to human intelligence. In order for this to work, many AI applications also have machine learning, or self-learning, capabilities. With this, AI can learn and adapt to patterns in data. For example, Netflix uses AI and machine learning to improve movie recommendations based on consumers’ viewing patterns.

What is Explainable AI (XAI)?

As stated earlier, AI uses machine learning for optimization. However, it is possible for AI to learn incorrectly, leading to biases, errors, and negative results. These systems are so complex that most businesses will not realize this is occurring, because the underlying logic about how the results were derived is not explained anywhere.

Let’s take a look at a real example of AI turning unknowingly biased. In 2015, Amazon discovered gender bias in their AI recruiting tool. Software developer jobs and technical roles are dominated by men. As machine learning AI is meant to, the system noticed this trend and taught itself that male applicants were preferable over female applicants. This led to the AI’s pool of applicants to be gender-biased.

Enter XAI: an in-depth analysis of AI systems by experts to detect any biases or self-taught errors so that companies can trust, understand, and explain their AI results.

The Need for XAI in Banking

As an industry that has direct impacts on customers based on AI-based decisions, it is vital to ensure the AI is ethical, fair, and in compliance with relevant laws.

Large American banks, such as Capital One, are already choosing to implement and benefit from XAI. The company states, “We want to ensure that we’re balancing the use of more sophisticated technology with the appropriate development and applications that ensure fair, unbiased, and explainable outcomes that all of our stakeholders can understand.”

Here are a few different results of XAI in the banking industry:

  • Credit scoring and decision fairness backed by explainable results.
  • More accurate fraud detection, reducing costs in follow-up investigations.
  • Ensured ethical, unbiased AI-based decisions that are in compliance with industry regulations.
  • Optimized market forecasting with an understanding of how/why the predictions were
  • Increased customer and stockholder trust.

Covid-19 and AI

The global pandemic is causing business environments, customers, competitors, and data to change. As mentioned above, AI detects trends and patterns in data as a part of machine learning. With the behavioral changes caused by Covid-19, the trends that AI recognizes are bound to be largely different than in past years. Will your AI adjust appropriately? Or, will it become obsolete? XAI will ensure your AI investment adjusts to this difference by providing fair, trustworthy, and unbiased results.

Be Ahead of the Curve

Do you want to learn more about how XAI can benefit your banking or financial service organization? Schedule a complimentary consultation with us today!

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