In this second of two episodes with Kareem Saleh, Founder and CEO of FairPlay AI, host Vince Passione continues the conversation on how AI, to date, has fallen short of its potential to deliver a fairer lending environment for all consumers, but how addressing historical bias in the learning data can create a more equitable future.

Key takeaways:

0:00 Intro

1:00 How historical data–the data that AI is typically trained on–contains bias, and therefore can perpetuate bias in the future.

2:27 The challenges for lenders of using historical data that contains bias, but also has valuable insights, such as an individual’s repayment performance.

3:25 Sometimes lenders have to “test and learn” into new markets to define their risk parameters.

5:26 Racial and ethnic minority groups are often wrongly stereotyped as always being underserved and/or in need of fundamental financial services.

6:44 The more financial stimulus to enable lending in under-represented populations, the greater the opportunity to remove long-term bias from data sets and have a fairer AI-driven underwriting system in the future.

8:21 A detailed overview of FairPlay AI, the algorithms it uses to pursue fairer lending for all, and its outputs and outcomes.

13:02 The double-risks posed to lenders by climate change: The risks to their members and the commodities borrowed against, and the physical risk to lenders’ collateral.

14:47 How climate change also represents a powerful opportunity for credit unions to grow and deliver on their mission.

16:14 The lending opportunities for credit unions interested in addressing climate change.

16:48 The NCUA has made it clear they are hyper-focused on fair lending, particularly in the auto market.

Resources Mentioned:

• https://fairplay.ai/ Fairplay AI
• https://www.novacredit.com/ Nova Credit
• https://www.lendkey.com/podcast/credits-new-frontier-cross-border-records-and-the-role-of-cash-flow-data/ Misha Esipov episode
• https://www.cooperaconsulting.com/ Coopera Consulting
• https://www.lendkey.com/podcast/service-or-stereotypes-can-credit-unions-engage-multicultural-consumers/ Victor Corro episode
• https://www.filene.org/reports/the-changing-climate-for-credit-unions The Changing Climate for Credit Unions
• https://ncua.gov/regulation-supervision/regulatory-compliance-resources/consumer-compliance-regulatory-resources/fair-lending-compliance-resources Fair lending resources from the NCUA

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