An ex-city official has brought to attention the risk associated with developments in banking technology. According to Mick McAteer, susceptible customers are now at risk of bias due to these advances. Insurers and lenders are gaining access to tools that help them to accurately detect costly or unprofitable customers. Mr. McAteer says that such factors intensify the danger of omission for specific segments of the public. Fresh responsiveness came after the new Apple Card algorithm, which is used to set loan limits, triggered claims of sex discrimination. Men are being offered more credit than their wives are despite having joint accounts. A tech entrepreneur, David Heinemeier Hansson, claims that Apple’s black box algorithm offers him 20 times more credit than his wife.
Similar problems are faced by Steve Wozniak, Apple’s co-founder, and his wife with Goldman Sachs. Yet, Goldman Sachs said that factors like gender are not used in credit evaluation. Technologies like open banking and fin-tech are gaining popularity in this tech-growth era. However, McAteer says that many societies are being excepted from the financial system. Banks and insurance firms use big data and tech to place customers in specific classes regarding their profitability and maintenance. As a result, differentiation leads to a difference in mortgages and credit card rates.Bias could be amplified by using this tech, says McAteer.
Mr. McAteer currently leads the Financial Inclusion Center and was formerly a Financial Conduct Authority (FCA) board associate. Lots of business prototypes are made around typical males with regular incomes and with definite likely patterns of netting growth. Thus, those with different behavior are at risk of being discriminated against. The UK’s financial system prohibits segmenting clients based on physical ability, gender, or race. Yet, tech analysis such as income and spending habits have been used to ease discrimination. McAteer points out that some will use these technologies for the better while others simply will not understand how to use them and will be left out.
The FCA last year raised alarms on racial profiling of satisfied clients by insurers who were ordering more data to set their values. Some firms scrapped the data usage after the regulatory authority claimed that it would contain personal and private information. The use of big data is raising concerns on its downsides, growth, and use. This will persist unless constraints by regulators are put in place to halt exclusion, says McAteer. Charlotte Crosswell, CEO Innovative Finance, has affirmed his words saying that measures have to be taken.
