Fed's Bowman: AI can expand credit access

Federal Reserve Governor Michelle Bowman is signaling a green light for banks to integrate Artificial Intelligence into their lending processes. For retailers and service providers, this is a major development. It suggests that the primary lenders you partner with will soon have more freedom to use advanced algorithms to approve customers who might have been rejected under traditional scoring methods. Bowman argues that banks, not regulators, should decide how to use these tools. This stance is likely to accelerate the rollout of more sophisticated credit products. AI can analyze 'alternative data'—like utility payments or cash flow—to build a more complete picture of a shopper's ability to pay. For your business, this translates to higher approval rates at the point of sale without necessarily increasing the risk of default. It also means faster decision times, reducing the friction that often kills a high-ticket sale. However, Bowman also warned that the human touch remains essential. Banks must ensure these AI models don't accidentally bake in bias or create 'black box' systems that they can't explain to regulators. As a merchant, you should expect your lending partners to become more tech-forward, but stay vigilant about how automated decisions affect your diverse customer base.

Source: American Banker — Top News

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