{"id":128675,"date":"2023-12-04T10:17:08","date_gmt":"2023-12-04T10:17:08","guid":{"rendered":"https:\/\/feedzai.com\/?p=128675"},"modified":"2024-04-09T09:12:07","modified_gmt":"2024-04-09T09:12:07","slug":"boost-the-esg-social-pillar-with-responsible-ai","status":"publish","type":"post","link":"https:\/\/feedzai.com\/blog\/boost-the-esg-social-pillar-with-responsible-ai\/","title":{"rendered":"Boost the ESG Social Pillar with Responsible AI"},"content":{"rendered":"

[vc_row row_height_percent=”0″ override_padding=”yes” h_padding=”2″ top_padding=”1″ bottom_padding=”2″ overlay_alpha=”50″ gutter_size=”3″ column_width_percent=”100″ shift_y=”0″ z_index=”0″][vc_column width=”1\/1″][vc_row_inner][vc_column_inner width=”1\/12″][\/vc_column_inner][vc_column_inner width=”10\/12″][vc_single_image media=”128689″ dynamic=”yes” media_width_percent=”100″ uncode_shortcode_id=”179295″][\/vc_column_inner][vc_column_inner width=”1\/12″][\/vc_column_inner][\/vc_row_inner][vc_row_inner][vc_column_inner column_width_percent=”100″ gutter_size=”3″ overlay_alpha=”50″ shift_x=”0″ shift_y=”0″ shift_y_down=”0″ z_index=”0″ medium_width=”0″ mobile_visibility=”yes” mobile_width=”0″ width=”2\/12″][\/vc_column_inner][vc_column_inner width=”8\/12″][vc_custom_heading heading_semantic=”h3″ text_size=”h3″ text_weight=”400″ uncode_shortcode_id=”918807″]Tackling fraud and financial crime demands more than traditional methods; it requires the smart integration of artificial intelligence, a game-changer for banks and financial institutions. However, banks face fresh obligations from Environmental, Social, and Governance (ESG) frameworks and emerging AI regulations worldwide. ESG and other regulations must ensure that AI decisions do not harm customers. Implementing Responsible AI<\/a> is essential for financial institutions to strengthen ESG\u2019s social pillar.\u00a0<\/span>[\/vc_custom_heading][vc_column_text uncode_shortcode_id=”143166″]Feedzai plays a vital role in the fight against fraud and financial crime. But that’s not all. We also deliver innovative solutions that empower banks to improve their social responsibility obligations.\u00a0<\/span><\/p>\n

Here’s how our industry-recognized Responsible AI solutions enhance banks\u2019 social commitments.<\/span><\/p>\n

How Does ESG Apply to Banks?<\/span><\/h3>\n

ESG principles guide businesses to operate ethically, sustainably, and in accordance with human rights. This could mean reducing a company’s carbon footprint, avoiding unethical labor practices, or preventing discrimination.<\/span><\/p>\n

ESG metrics not only focus on cross-sector issues like the transition to reduced carbon emissions. It also explores industry-specific topics like socially responsible lending, securing data privacy, and fair financial decisions for customers.<\/span><\/p>\n

The social pillar of ESG aligns with Responsible AI by promoting fair and unbiased decisions in banks’ AI systems. By adopting Responsible AI, banks can proactively meet regulatory standards and show their commitment to social responsibility. These may include reducing the likelihood of bias, discrimination, and unfairness in their operations. This ultimately contributes to a more inclusive and equitable financial ecosystem.<\/span><\/p>\n

ESG and Responsible AI Pressures Build for Banks<\/span><\/h3>\n

As banks pursue their mission with the increasing involvement of AI, they face new realities brought on by recent regulatory shifts and rapid-paced technological advancements.<\/span><\/p>\n

A New Era of ESG and AI Regulations<\/span><\/h4>\n

The ESG landscape is evolving rapidly. Nearly <\/span>30 countries<\/span><\/a> are implementing or will enforce mandatory ESG regulations.\u00a0<\/span><\/p>\n

This surge in ESG regulations underscores the need for financial institutions to adhere to social guidelines, promoting transparency and anti-discrimination practices. It also coincides with a push for greater AI regulations for similar reasons.<\/span>[\/vc_column_text][vc_single_image media=”119734″ media_width_percent=”100″ uncode_shortcode_id=”203565″ media_link=”url:https%3A%2F%2Fhubs.la%2FQ02bzR2j0|target:_blank”][vc_column_text uncode_shortcode_id=”300310″]First, the European Union’s <\/span>AI Act<\/span><\/a> imposes strict conditions on the development and use of AI. The measure aims to ensure safety, transparency, origin, environmental friendliness, and non-discrimination. Financial institutions, particularly in credit scoring models, face explicit scrutiny, emphasizing the urgency of responsible AI adoption.<\/span><\/p>\n

Meanwhile, the US has taken steps recently to regulate AI. President Joe Biden issued a historical <\/span>executive order<\/span><\/a> requiring artificial intelligence safety and security assessments. The order will focus on consumer protection, bias mitigation, and studying AI\u2019s societal impact.<\/span><\/p>\n

Even <\/span>technology firms<\/span><\/a> that produce AI are calling for greater regulation. For example, ChatGPT’s creator, OpenAI, supports creating an oversight agency as part of the EU\u2019s AI Act. The AI Act’s design ensures that AI systems used in the EU are non-discriminatory.<\/span><\/p>\n

Adapting to the GenAI Challenge in Fraud Prevention<\/span><\/h4>\n

While GenAI promises enhanced customer engagement through advanced chatbots, it also opens doors to sophisticated fraud threats. This includes refined email phishing schemes and synthetic identity creation.<\/span><\/p>\n

The emergence of tools like FraudGPT, derived from ChatGPT, raises the stakes. These programs can generate convincing fraudulent communications, making traditional detection methods less effective. Similarly, applications like LangChain leverage GenAI for hyper-personalization, potentially aiding fraudsters in tailoring their attacks using harvested data.<\/span><\/p>\n

For fraud and financial crime prevention teams, this presents both a challenge and an urgent call to action. Banks must not only stay informed about the latest GenAI developments. They must also invest in advanced detection and prevention strategies. This includes:<\/span><\/p>\n