When AI becomes ubiquitous in lending, Responsible AI becomes necessary for responsible lending. In the context of lending, Responsible AI ensures that AI systems used in the lending value chain do not pose risks to the system or the customer.
One way in which systemic risks manifest is the concentration risk that arises when lenders rely on the same underwriting model and therefore lose out on stability gains from diversification.
Customer risks take the form of discrimination, privacy infringement and adverse implications for customers’ financial health on the back of loans that customers can ill afford.
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