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Recent research from the University of Bath shows discrimination against women worsens if Artificial Intelligence (AI) is used by lenders for loans, but that ethical lenders could choose to tweak the AI algorithms to address this bias and still improve their profits as well as their brand reputation.

The study of the role of salesforce commissions on loan decisions made at car dealerships in Canada highlighted that using AI raised lenders' profits significantly and did not intensify existing biases against customer groups who have been traditionally marginalized by society—with the glaring exception of women.

"We found that lenders could boost profits by applying machine-learning techniques to thousands of car loans. However, this profit comes with a considerable downside: AI can make car loan deals disproportionately less favorable for women, exacerbating social injustice in the system," said Dr. Christopher Amaral of the University's School of Management.

The research showed that lenders employing AI to optimize salesforce commissions could boost annual profits by up to 8% but that came at an increased cost to women. However, researchers identified that the bias against women could be mitigated by tweaking the AI algorithms behind the sales commissions and still result in a profit increase of up to 4%.

The researchers programmed the machine learning algorithm to maximize profits while constraining it to ensure women were not further disadvantaged. They found that organizations could still lift their profits by sourcing them from the non-marginalized group—men.

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