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Ethical and Legal Concerns of Using Artificial Intelligence

Many credit unions already use AI-based technology, and that number is growing. This report provides an introduction for credit unions wanting to better understand AI and the ethical and legal concerns that arise from its use.

Executive Summary

As of 2018, nearly one in five US residents has access to a smart speaker, those AI-driven, voice-activated devices that act as personal assistants. We marvel at the capabilities this technology provides, as evidenced by thousands of online videos on the subject. A few of these videos even voice caution and alert us to potential risks to our privacy and safety. And these are valid considerations; wouldn’t you want to know how your personal information—what you buy, who you interact with, and what you talk about—is kept secure and that it does not compromise you in some way? And the potential risks extend beyond data security into the realms of ethics and law.

What is the research about?

This report provides an introduction to understanding AI, its applications, and associated terminology and provides context for how AI-based technology is being used in financial institutions. The research is further informed by a credit union survey and focus group results that offer insights into what types of AI credit unions currently deploy, and the attitudes that credit union leaders hold about AI.

AI technologies present a new suite of legal and ethical issues, and the regulation of such technology is only beginning to be addressed. Although credit unions already leverage, or plan to leverage, AI technology in their operations, they may lack understanding of how the algorithms that drive AI are used to create efficiencies and decisions within their organizations.

Further complicating the use of AI is that underlying bias is often present in these technologies, and unless credit union leaders ask the right questions and carefully evaluate the algorithms driving the technology and the social contexts in which the technology is used, they could unwittingly participate in furthering inequality in their communities. Chandra Middleton suggests that credit unions can serve their members by becoming experts in the creation and use of AI-based technologies so as to serve larger portions of their members’ communities more ethically while making the case to their members through education that such deliberate and ethical actions are worth the credit unions’ investments. Credit unions might also differentiate themselves from competitors by leveraging transparency and the ethical use of AI to help drive a more open and transparent use of this technology for everyone.

What are the credit union implications?

The use of AI in credit unions is still new, as are regulatory developments and legal protections that could safeguard consumers in the face of this new technology.

Credit unions can begin addressing the ethical and privacy issues associated with the growing use of AI by:

  • Developing a means to evaluate the adoption of AI-based products and choosing products carefully.
  • Developing educational programs to inform credit union leaders on AI and sharing widely with the larger cooperative banking system.
  • Educating credit union members about what AI means to them as consumers, and leveraging this information to protect and inform the larger credit union system.
  • Contributing to the development of regulations around the use of AI by financial institutions. As credit unions represent the interests of all people, help ensure that regulations protect the needs and rights of everyone in your community.

No doubt it is a thrill when smart technology can predict your favorite song or know when you need to buy more milk. But it’s also smart to understand what information these robot-human interactions will generate about you and how that information will be managed.

And wouldn’t you want your credit union members to understand how your credit union and its partner companies use their information? We are just beginning to learn the different applications of AI for credit unions, and we owe it to our members to advocate for transparency and inclusiveness so that this promising technology is used well and improves the lives of many.

Executive Summary


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