Show your workings: lenders push to demystify AI models
Machine learning could help with loan decisions – but only if banks can explain how it works. And that’s not easy
From derivatives pricing to credit card fraud detection – and a few places in between – artificial intelligence is extending its reach across the financial sector. But difficulties with explaining to regulators and senior management how self-learning algorithms work continue to hold back the use of machine learning in most banks’ core business of lending.
“Credit underwriting is the highest risk
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