We recognize the breadth of urgent issues facing the Consumer Financial Protection Bureau and the nation at this time, but believe that resolving critical questions about access to financial data would substantially benefit consumers, small businesses, and financial services providers in helping to recover from the Covid-19 pandemic, address longstanding racial wealth gaps, and make U.S. financial systems more generally inclusive, competitive, and responsive to customer needs.

FinRegLab presents a webinar with diverse leading voices from the federal regulatory community on the use of artificial intelligence in credit underwriting. The event focuses on regulators’ perspectives in relation to explainability and fairness in consumer and small business credit underwriting models where all credit stakeholders – lenders, advocates, and policymakers – are considering the implications of a broad transition to AI-based underwriting.

The credit system plays a foundational role in helping millions of families and small business owners build better lives for themselves, strengthening local communities and the national economy in the process. Yet millions of individuals and small businesses struggle to access the credit system because of weaknesses and gaps in the type of data traditionally relied upon for credit underwriting.

In many smaller American towns banks and credit unions are finding usual sources of loan demand dwindling — and that was before the COVID-19 recession. Community banking institutions may find trouble if they market their credit services further afield. The solution may be to dig deeper for loans in the communities they already know, marketing loans to be evaluated with new alternative data sources (like some fintechs do).

Resolving data transfer issues could facilitate use of cash-flow data, with particular opportunity to expand access to credit for millions of underserved consumers and small businesses

FinRegLab and the Federal Reserve Bank of San Francisco fintech team hosted a symposium titled “The Role of Consumers in the Data Ecosystem” on November 4-5, 2019, in Los Angeles, California. The event involved more than 130 stakeholders from diverse backgrounds, including not only industry, advocates, researchers, and regulators who focus on U.S. financial services but also perspectives from other sectors and countries.

Data is being used by both new entrants and traditional lenders to extend smaller loans to smaller businesses and increase credit to underserved communities.

Data both helps to underwrite applicants who lack traditional credit history and improves risk sorting among borrowers who are ranked similarly by traditional scoring systems.

The growth and use of data is increasing exponentially in the American economy and specifically within its financial systems. This data has the potential to benefit consumers and the broader economy in myriad ways.