Western banks lack transparency in their usage of AI, report finds
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Banks in Europe and the US are failing to publicly report on the progress of their AI development, a report has found.
According to a report from Evident, which scrutinises the adoption of AI by businesses, one-third of Western banks lack transparency on their practices, despite the fact that AI is already being used by them for many critical processes.
Used for such tasks as authenticating customers and risk modelling, eight of the 23 largest banks in the US, Canada and Europe currently provide no public responsible AI principles.
Evident analysed millions of publicly available data points to assess how banks create AI leadership roles and define their ethical principles.
Alexandra Mousavizadeh, Evident CEO, said: “AI could be the key driver of better risk management and decision-making across the global banking sector. However, it is vital that banks develop AI in a way that meets high ethical standards and minimises unforeseen consequences.
“Our research found a worrying lack of transparency around how AI is already used – and how it may be used in the future – which could damage stakeholder trust and stifle progress.
“In this highly regulated sector, the reality is that many institutions are taking proactive steps to address AI concerns and developing internal programmes to address responsible AI.
“The problem is that there is no standard for responsible AI reporting and many banks withhold the details of their efforts. At this critical time for the sector, the banks need to show leadership and start reporting publicly on their AI progress.”
The index found that Canadian banks are the most transparent on responsible AI reporting, with European banks the least.
Only three banks – JPMorgan Chase & Co, Royal Bank of Canada (RBC) and Toronto-Dominion Bank (TD Bank) – were found to have “a strategic focus” on transparency around responsible AI.
Approaches to hiring AI talent also differ regionally, with North American banks more likely to hire specific responsible AI roles, usually from 'Big Tech' firms, and European banks tending to lead responsible AI within their data ethics teams.
Evident co-founder Annabel Ayles added: “It’s perhaps unsurprising that two Canadian banks, RBC and TD Bank, perform well as the country itself facilitates a lively AI ethics conversation. The top-ranking banks also tend to have strong research hubs, which we believe helps them address the technical challenges of implementing ethical standards into AI.
“It’s similarly clear that banks are trying to work out the links between responsible AI and data ethics. European banks which view responsible AI through a lens of data ethics, potentially due to the dominance of GDPR legislation, are perhaps missing a trick by not creating AI-specific roles and thinking holistically about the broader risks posed by AI.”
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