New Delhi, March 05, 2022: A new partnership between advocacy organization Women’s World Banking and digital credit provider Lending kart shows that gender fairness and meeting business objectives go hand in hand. While many AI or machine learning models for credit scoring have the potential to discriminate against women, Lending kart Cred 8’s credit scoring model demonstrates that fairness is possible on many important dimensions.
These findings could be instrumental in encouraging other institutions to allocate credit fairly, narrowing the $1.7 trillion global gender credit gap among SMEs.
Women’s World Banking and Lending kart have worked together to establish criteria for fairness supported by advanced statistical techniques to test Lending kart’s underwriting model against these defined criteria. The research highlighted most of the gender imbalance in Lending kart’s portfolio is owing to low volume of women SME credit applicants, not the actual scoring methodology itself.
The bias audit builds on Women’s World Banking’s recent study, Algorithmic Bias, Financial Inclusion, and Gender, which offers insights on where biases in AI emerge, how they are amplified, and the extent to which they work against women. The bias audit used advanced statistical techniques and reject inference analysis on de-identified information on borrowers, to conclude
- On average, women were about as likely to be approved for a loan as men are.
- The credit scoring algorithm gave similar scores to men and women.
- Gender had nearly no effect on loan terms, including loan size and interest rate.
- All customers (including men and women) of Lendingkart had the same repayment rate, different than the market average in which men customers represent nearly twice the non-performing assets (NPA) that women’s do (7 percent NPA versus 4 percent NPA).
“Given how new these alternative credit scoring methodologies are, we expected to see bias. While we may have found this in another institution, we were thrilled to see that Lendingkart’s model gives women-owned SMEs a fair shot at accessing credit,” says Sonja Kelly, Director of Research and Advocacy at Women’s World Banking.
“We are delighted to know the outcome of the audit conducted by Women’s World Banking. Over the past couple of years, we have worked hard to actively train our credit scoring model to be as accurate as possible. The emphasis on accuracy has also translated into fairness across the most important and impactful dimensions. We are proud of our credit scoring model that also powers Lendingkart Cred8 treats all applicants irrespective of gender,” says Harshvardhan Lunia, Co-Founder and CEO, Lending kart.
We believe that success of MSMEs businesses run by women is key to the growth of this sector and the economy of India. Our larger goal has always been to provide access to capital to an under served segment and will actively look to onboard more women MSMEs on the platform”, added Harshvardhan.
These findings demonstrate that not only is gender-fair credit scoring possible, but it is also good for business as it increases the overall accuracy of the model. Women’s World Banking is taking this same approach to other financial institutions around the world seeking to address the gender credit gap. As a follow-up to the audit, Lendingkart is working to increase women’s representation by increasing awareness of their products among women-owned SMEs.
Corporate Comm India (CCI Newswire)
