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 use of this technology and we would expect a great deal of explainability to be provided,” says a