Establishing a Social Licence for FinTech: Reflections on the role of the private sector in pursuing ethical data practices

Mhairi Aitken, Ehsan Toreini, Peter Carmichael, Kovila Coopamootoo, Karen Elliott, Aad van Moorsel
Big Data & Society 7(1), https://doi.org/10.1177/2053951720908892. First published: March 4, 2020
Keywords: Financial Technology, data, social licence, ethics, responsible artificial intelligence, trust

Recent years have witnessed a dramatic increase in attention directed at ethical dimensions of data practices and Artificial Intelligence (AI). Increasingly momentum for innovation is being met with interest in related ethical considerations and a number of high profile institutes and bodies have been established to focus on this area. The substantial investment in this field has to date largely resulted in a proliferation of guidance and sets of principles relating to ethical AI but important questions remain as to how such principles can be put into practice, and to what extent commitments to ethical AI go beyond rhetoric.

These are questions we engage with in our paper “Establishing a Social Licence for FinTech” and which also underpin our ongoing programme of research through our EPSRC-funded project “FinTrust” which examines the role of AI in finance.

We focus on FinTech (financial technology) as this represents a fast-moving industry and one which is attracting substantial investment. Within FinTech there is industrial advocacy surrounding the potential benefits of data science and AI in banking, however to date there has been little consideration of the ethical dimensions of these practices or the extent to which they align with public values and expectations. Therefore, our research focusses on FinTech in order to examine the opportunities and potential approaches to develop ethical data practices which go beyond compliance with regulation.

In our paper we consider the importance of establishing and maintaining a Social Licence for data practices. The notion of a Social Licence recognises that there can be meaningful differences between what is legally permissible and what is socially acceptable. A Social Licence is granted by a community of stakeholders and is intangible and unwritten but may be essential for the sustainability and legitimacy of particular practices or industries.

With attention being directed at digital ethics there is emerging interest in pursuing a Social Licence for data practices. However, it is interesting that while the notion of a Social Licence emerged in the 1990s in relation to private sector extractive industries (e.g. mining and forestry), to date where this has been discussed with regards data practices it has largely been in relation to public sector activities (e.g. healthcare and health research). In our paper we therefore consider what this means for private sector data-intensive industries, such as FinTech.

In discussing what would be required to establish a Social Licence for FinTech, we consider three main points:

1. A Social Licence is underpinned by relationships of trust which need to be sustained over time. We consider how trust is established and what it might mean for a FinTech to be considered trustworthy.
2. Establishing trust requires both technical and social approaches. We discuss the current technical approaches advocated in ethical AI (relating to Robustness, Fairness, Explainability and Lineage), the extent to which they may be conceived to demonstrate trustworthiness, and the importance of combining these with social approaches.
3. Establishing and maintaining a Social Licence requires engagement with diverse stakeholders. Given that data practices are having far-reaching – and often unpredicted – impacts across society a broad conception of stakeholders acknowledges the importance of wide public engagement beyond potential service-users. We suggest that wide public engagement with broad publics is vital to ensure that current and future practices reflect public values and interests. Our paper then considers the extent to which it is reasonable to expect such broad approaches to be adopted by individual FinTechs or the wider industry.

The paper poses a number of questions to which we do not yet have the answers. For example, the paper does not aim to identify public interests or concerns relating to data practices in FinTech, or to set out what is required for FinTech to align with public values. Since there is a paucity of public engagement or deliberation examining public values around FinTech practices, further research (including through public engagement methods) is needed to examine what this means in practice.

Combining our interdisciplinary perspectives from Computer Science, Sociology, Human Computer Interaction and Organisational Science, our FinTrust project is continuing to build on the work presented in this paper to address these tricky questions. We aim to develop a toolkit which will set out a combination of technical and social approaches to underpin a future Social Licence for FinTech practices.

We posit that such approaches are needed across all areas and industries whose operations are dependent on data. Pursuing a Social Licence will complement regulation and build on ethical codes of practice. This is important to underpin culture change and to move beyond rhetorical commitments to develop best practice, meaningfully putting ethics at the heart of innovation.