Monetary Authority of Singapore (MAS) on May 28 announced the commencement of the first phase of the Veritas initiative – a framework for financial institutions to promote the responsible adoption of Artificial Intelligence and Data Analytics (AIDA).
It will begin with the development of fairness metrics in credit risk scoring and customer marketing. These metrics will help financial institutions validate the fairness of their AIDA solutions in these two use cases, MAS said.
Credit risk scoring to assess the credit worthiness of borrowers is a critical function of the financial services industry and impacts most customers of financial institutions. Given the large amount of customer data to analyse, financial institutions are increasingly employing AI tools for this purpose.
MAS stressed that it is crucial that AI-driven decisions do not systematically disadvantage any particular individuals or groups when determining the credit risk scoring.
Customer marketing is another area with significant potential for AI adoption. As marketing processes become increasingly digitalised and automated, there is increasing scope to use AI tools to analyse customer data and match products or services to customers. Hence, it is important that such AI solutions recommend the right product to the right customer at the right time.
Two core teams within the Veritas consortium will be taking on the development of the fairness metrics. UOB and Element AI will develop the metrics on credit risk scoring; while HSBC, IAG Firemark Labs and Gradient Institute will develop the metrics on customer marketing.
“The responsible use of AI is a prerequisite for the greater adoption of AI in the financial sector," said Sopnendu Mohanty, Chief FinTech Officer, MAS. "Veritas is the first industrywide collaboration to provide a mathematical way to validate AIDA solutions against the principles of Fairness, Ethics, Accountability and Transparency. We hope Veritas will speed up the adoption of AI in financial services in the right direction.”