Outlier Ventures Weekly Brief Issue #49 View Online

The world of fintech had a much-needed conversation this week. About the plausibility of algorithms having gender or race-based biases in the financial world. It came to light as entrepreneur David Heinmeier Hansson tweeted about his experience with a credit card released by Apple. Inspite of having the exact same financial profiles, a card issued by Apple in collaboration with Goldman Sachs offered him a credit limit that was 20 times above that of his wife’s. Given that the only difference between the two individuals was their gender, it could be argued that the algorithms were being lenient to one gender over the other. The facts behind it may never come to light as the proprietary algorithms banks use to determine these factors are never released. 

Given the siloed environments within which technology and finance converge, there is very little oversight on how it is designed. For instance, an algorithm that determines whether someone gets a much-needed credit line during a time of emergency may have very little vetting from third parties. Even the source of the data that goes into these systems has very little checks and balances. Imagine being at a hospital, hoping for a much-needed line of credit but having it denied because one of the data sources that feed to a hospital gave erroneous information on you. Or the possibility that a credit check on you ends up wrong because you were wrongly identified in a third-party vendor’s system. 

Much of what is broken with the web is likely to be replicated with “fintech” if due checks and balances are not kept in place. The scary bit about it is that unlike “logging out” of Facebook, one cannot entirely log out from the financial world. In a world where governments are rushing to go “digital” with their currency and make cashless societies, these algorithms determine the fates of human lives. One way blockchains fit in this conversation is with identity. Self-sovereign identity is already being massively integrated into the credit industry. Blockchains could be used to track the source of data and verify the entities responsible for algorithms that act upon them. Token-based instruments could also be used to incentivise individuals to share data while knowing who uses it. This would be different from existing data share networks that relay personal information without the individual’s consent or awareness. I need to research more about this, but if you are solving for these - make sure you apply for Base Camp!

In the end, everything ends up being fintech. Be it a search giant like Google, a rideshare app like Uber or a social media app like Snapchat. Eventually, it all converges around payments and lending. As the web evolves from advertising-driven models to one where value is captured at the transactional layer, it becomes ever more necessary for regulators and users to question the basis upon which our algorithms behave. Maybe, our algorithms need algorithms that check on their behaviour. Because at the end of the day, if the data-sets they are trained upon come with human biases then automating the process with an algorithm simply automates (or accelerates) the pace at which we pass unfair judgements. That is not really us building towards a better tomorrow with technology, is it?

Thinking about : Synthetic currency issuance
Reading : Hackers and Painters
Using : ENS Domains (register your .eth domain if you haven't already)

Have a wonderful weekend!
Joel John


From The Stack

  • Fetch.AI CEO Humayun Sheikh will be speaking at the Istanbul Binance meetup this wednesday - Link
  • Bruce Pon from Ocean Protocol published a blog post exploring how to tokenise and monetise data - Link
  • The entirety of the Cosmos and Agoric meetup at Berlin focused on blockchain interoperability is now up on youtube to watch! - Link
  • The monthly Cosmos newsletter is out with updates on key product releases from the Cosmos ecosystem  -  Link
  • Wish to learn about how Aragon's native token is used in network governance? Catch up n their latest token documentation released earlier this week - Link
  • Tor Bair from Enigma gave an in-depth conversation on building, retaining and inspiring a community as networks inch to launch.- Link
What The Team Is Reading
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