Male-centric financial data is creating a bias in AI. Reinforcing male financial dominance and power – leading to low women’s financial inclusion.
In today’s world, many problems can be traced back to the desire for power, which is often associated with male ego. Power often leads to conflicts, and these conflicts usually revolve around a man or a group of men seeking to exert control over others. However, power alone isn’t enough – money plays a crucial role in perpetuating this power dynamic. To understand how men maintain their power – intentionally or otherwise, we need to follow the money.
This article isn’t an investigative expose on megalomaniacs and their financial dealings. Instead, inspired by a conversation with Mary Ellen Iskenderian, CEO of Women’s World Banking (WWB) and author of « There’s Nothing Micro about a Billion Women » I focus on why men find it easier to access financial resources compared to women and how artificial intelligence (AI) can both help and hinder women’s financial inclusion.
One might assume that financial exclusion is primarily an issue in developing countries. However, a study by the Boston Consulting Group reveals that the financial services industry is among the least sympathetic to women globally, and the sector in which companies stand to benefit the most by changing their approach.
To illustrate this in a first-world context, Iskenderian points out that « the presence of a woman on the VCs investment committee is the single most significant factor in determining whether a woman-led business will receive funding”. However, this isn’t solely a problem of male bias. An experiment in Turkey involving 334 loan officers from a bank showed that both male and female loan officers often made loan approval for a woman-owned business conditional on the presence of a guarantor, even when a loan application was identical to another application – except for the gender of the entrepreneur.
Getting financial access
Access to financial services remains a challenge for almost one third of adults, despite the rise of alternative financial service providers and mobile banking. In developing countries, women are nearly 10% less likely than men to own a bank or mobile money account, often because of the lack of proper identification. 44% of women, compared to 28% of men, lack the identification to open a bank account.
The impact of AI on financial inclusion
Cellphones and digitalisation have opened up the possibilities for the unbanked to have access to financial products. AI has added the possibility to do this at scale. But off-line gender discrimination in credit decisions is frequent, despite women having consistently higher credit scores and repayment records (both in developing and western countries). Therefore, with no other data available, AI is being trained on lending data that is already biased. Whilst WWB is pushing for lending data to be segregated by gender in order to understand and overcome these biases – there are both data collection and legal problems. Goldman Sachs’ online bank – Marcus – has already proven to have a gender bias because the data being used was ‘gender blind’ (as required by law), yet replicated hidden gender prejudices from previous lending decisions.
Beyond identification and data bias, there’s another problem – cultural and educational inequalities. As explained by Roselyn Najjuma Thabit, Head Transaction Banking at Standard Chartered Bank Uganda. “In emerging markets there are cultural inequalities that inadvertently favor men for jobs that are more digitally friendly and thus more suitable for lending scorecards. Even when behavioral scorecards are used, they often contain questions biased in favor of men, exacerbating the financial divide between genders.”
Why women are better customers than men
Internal research by WWB has shown that financial service providers with over 50% female clients have higher returns on equity and assets. Women also show better loan repayment rates, are more consistent savers, and build higher savings to income ratios than men.
Gender bias in credit decisions is costly for banks and lenders. If women were granted mortgages and personal loans at the same rate as men, it could create additional annual revenues estimated to be between $32 billion and $65 billion.
Learning from history
Historically, women have managed money differently than men, prioritizing their families’ well-being. When women have control over financial resources, they invest in essential needs like food security, health, and education more than men do. Improving women’s financial access has a positive ripple effect, leading to better outcomes in health, education, and lifelong earning potential for the entire family.
Reversing power dynamics
At the beginning of this article, I stated that in order to understand the roots of power – we need to follow the money. But we can also understand the uses of money if we understand who holds the power. When we empower women to take charge of their financial futures, we tilt the scales and this shift holds the promise of a fairer world where the dynamics of power are more balanced.
French