Harnessing AI to boost financial inclusion

The All-Party Parliamentary Group on Data Analytics was delighted to host an exclusive parliamentary roundtable on AI and financial inclusion on Monday 10th December 2018, in collaboration with the credit reporting agency, Equifax.

Chaired by Labour MP, Daniel Zeichner, the event brought together a range of organisations from across the financial services sector to discuss how the rise of artificial intelligence and new forms of data analysis can be used to address the risks of financial exclusion amongst those on low incomes.

The AI sector deal, establishment of the Centre for Data Ethics and Innovation, and expansion of the Financial Conduct Authority’s regulatory framework to encompass emerging technologies have demonstrated a proactive attitude to developments by both the public and private sectors.  However, the potential of AI to enable more people to access financial services at more affordable prices is only just being explored and understood.

The shift from physical money to digital transactions when combined with new regulation and emerging technologies is creating an environment of radical change across the financial services sector. Profound implications are expected for traditional insurance structures for example, as the Internet of Things and data utilisation methods lead to traditional policies disappearing to be replaced by ones based on real-time and personalised data.

John Power, Chief Data Analytics Office Europe at Equifax, opened the discussion with an overview of how Equifax is using explainable artificial intelligence to improve lending decisions. Explainable AI empowers consumers by giving them clearer information on what steps they can take to meet creditors lending requirements.  It also allows lenders to take more accurate decisions, so they can accept more consumers who afford credit and protect others from taking on what will become problem debts.  Equifax was recently granted the first patent for a risk tool that uses explainable AI. 

The following discussion focused on three areas;

  • Recent developments in AI
  • Improving consumer choice and protections
  • New regulatory principles required as new technologies are introduced within the financial services sector

A common theme throughout the discussion focused on concern for the sharing of sensitive information. Although the introduction of the General Data Protection Regulation (GDPR) and Data Protection Act has introduced new consumer protections for how sensitive data is used, all participants acknowledged a level of wariness from members of the public continues to exist in this respect. Many of those present agreed that traditional financial service providers, especially retail banks, had a leading role to play in reassuring consumers about their data protection rights, but also to adopt a positive view of how data can be used to improve access to sustainable new forms of credit.

Those present also discussed the cross-sector nature of credit data. With the development of increasingly sophisticated methods of data collection and analysis, the relationship between consumers and their data increasingly impacts upon access to a range of other public and provide services. Credit ratings can today influence access to telecoms, internet access, travel insurance, and access to healthcare. As a result of this, the roundtable discussed how to improve awareness amongst the public to realise how day-to-day choices can affect far more serious decisions made later in life.

The discussion also touched on a number of issues raised in an article written by Equifax Vice-President, Rhona Parry, for the New Statesman in November 2018, such as the need to capture information pertaining to the payment of rent by private renters. 

There was acknowledgement from participants about how to balance the necessity of interacting with a plethora of organisations, businesses and service providers on a day-to-day basis with the right to have ownership of the data collected, as well as the rising commercial value of this data. There is a growing need for members of the public to have good data management skills in addition to money management skills, with little evidence of policy makers taking this seriously.

Despite these areas of concern, the roundtable also noted grounds for optimism. New banking platforms such as Monzo have given consumers far greater awareness over their spending habits. As a result of this, self-imposed spending caps and smartphone apps are now being adopted by more established banking institutions, improving consumer choice and control. The panel also cited how modernised regulatory principles are also being developed by the Bank of England and other bodies.

The roundtable forms part of a wider calendar of research and events being undertaken by the APGDA. The Group is currently undertaking a wide-ranging inquiry into technology and data ethics. The subsequent report will be launched in April 2019 and will set out a number of recommendations for how big and open data can be used for the public good. Matters arising from this and other roundtables will also form part of a programme of engagement with bodies such as the Science and Technology Select Committee, HM Treasury, and the Centre for Data Ethics and Innovation.