Rich Data Corporation founder Ada Guan is bringing ethical AI into financial services. Here’s how.
Aussie startup Rich Data Corporation is applying an ethical AI model to improving access to credit and close the financial inclusion gap.
We’ve long heard that data is the new oil. But with more and more data in supply every day, and more and more businesses making use of it, it has become something of an ethical quagmire.
Needless to say, businesses and consumers alike would be wise to tread carefully.
Aussie startup Rich Data Corporation is doing just that, applying an ethical AI model to use data for good, improving access to credit and closing the financial inclusion gap.
In June last year, the business raised $15 million to fuel its growth in Australia, Asia, the US and Europe, in a bid to meet rapidly growing demand. But for founder Ada Guan, whose roots are in corporate finance, the startup journey has been one big learning curve.
SmartCompany Plus sat down with Guan to unpack the ethics behind AI in financial decision-making, and how her values trickle into every element of her business.
What is Rich Data Corporation?
Founded in 2016, Rich Data Corporation (RDC) is an AI-powered software-as-a-service startup that offers banks and lenders a new, more equitable way to serve people with limited or poor credit history.
The tool applies AI to behavioural data, helping lenders get a deeper insight beyond traditional credit history sources.
That could include banking transaction data and open banking data, but also usage patterns in telecoms or even data based on their usage of mobile devices, Guan tells SmartCompany Plus.
It’s about financial inclusion for those who have been historically excluded, she explains. But it also applies to Gen Y and Gen Z — people who are less likely to have ever had a credit card, leaving them without a credit history.
That’s also the case for small businesses applying for credit. It can be difficult for institutions to understand or assess the behaviour of business clients, often leading them struggling to access finance.
Rich Data Corporation founder and chief executive Ada Guan. Source: supplied.
“Globally, that’s a massive gap in the market,” Guan says
In Australia, according to the RBA, some 25% of small businesses struggle to get access to credit.
In many other countries, that stat is even worse.
All of this can lead to both consumers and business owners borrowing from friends or family, or even turning to the black market, the founder notes. Of course this can be damaging in the long run.
RDC uses data to better understand people’s behaviour, to assess their ability and willingness to make repayments, Guan explains.
Ultimately, the idea is to benefit the borrower, the lender and the economy as a whole.
Tapping into ethical AI
All of this may sound a tad ‘Big Brother’. Using extensive data points to derive credit worthiness feels more than a little sci-fi, and perhaps veers into the problematic.
But RDC is tapping into a trend of ethical AI, Guan says.
We’re seeing an explosion of data availability, and people are using it. With so many data points available, the only way to do that is through AI.
However, for purposes like this one, if the AI doesn’t provide transparency, and if it has biases in the algorithm, there’s a risk that it could actually be more damaging to borrowers than the existing system.
Apple’s credit card, for example, was famously accused of sexism after offering women lower credit limits (although the claims were debunked after an investigation by the New York State Department of Financial Services).
Still, even Apple co-founder Steve Wozniak said Apple Card’s AI offered him a credit limit 10 times what it offered his wife, apparently for no discernible reason.
The same thing happened to us. I got 10x the credit limit. We have no separate bank or credit card accounts or any separate assets. Hard to get to a human for a correction though. It’s big tech in 2019.
— Steve Wozniak (@stevewoz) November 10, 2019
Guan and her team are approaching the problem with a set of key questions in mind.
“How do we embed ethical principles, not only in the AI part, but when sourcing the data?
“How do you have the right ethical principles all the way through? And how do we provide transparency around the AI algorithms?”
RDC is building what Guan calls a “glass box AI”, which will allow humans to view and understand the algorithms, and to look into why certain decisions were made.
That’s “critical” for lenders to be able to use AI in a truly ethical way.
It’s the right thing to do, but it’s also a crucial element in getting AI off the ground, widely adopted and embedded into people’s lives — particularly when it comes to financial services.
Without transparency, regulators will never be comfortable, Guan notes.
“You almost need to start from the principles, and show that they’re embedded in your process, in your product and in everything you do,” she adds.
“That’s how we can start to solve the issue.”
Learning on the job
This is Guan’s first startup, and having come from a corporate background, she can find herself feeling a little uncomfortable, she admits.
The biggest learning curve has been around resourcing, she explains. That is, the relative lack of it.
Tight resources affect pretty much every aspect of the business, not least its capacity for hiring.
And Guan has learnt that this means onboarding the people who not only have the right skills, but the resilience, adaptability, drive and passion that are so crucial in a startup environment.
“We didn’t realise how important that was until the pandemic hit. You can’t plan anymore — you just need to make the best out of the situation you’re in and just keep going.”
For a startup, the strength of the team is one of the most important drivers of success, she adds.
“It’s going to be hard,” she says.
“You really want to make sure the people beside you have the same values as you and the same drive as you, and that they will carry the weight with you when times get tough.”
It’s been a learning curve, and Guan admits she hasn’t got the hiring element right every time in the past.
But while RDC interviews focus first and foremost on the candidate’s ability to perform in the role, they also explore their values and whether they align with those of the business.
Ultimately RDC is all about financial inclusion and access to credit. A lot of people in the fintech and AI community share that passion.
Sure, Guan wants to run a successful and profitable business, she says.
“But to be able to really have that social impact is something we equally feel passionate about. Perhaps more passionate.”
Maintaining balance
Building passion, resilience and adaptability into the RDC team doesn’t mean Guan expects a ‘work-comes-first’ attitude from her team members — or indeed from herself.
In fact, she says quite the opposite is true.
“It’s very easy for entrepreneurs to sacrifice their life to be an entrepreneur,” she says.
As a mum of two, that’s not something she’s willing to do. As far as she’s concerned, there’s no reason being a good parent and a good business owner should be mutually exclusive.
She recalls a conversation she recently had with a colleague, in which she essentially told him to go home, take a walk and stop working so hard.
We all have “big rocks” in our lives, she says. These are the important things — your health and your family.
“Put those big rocks in place, and put work around them. Don’t put work in the middle of your life and then build everything around that,” she explains.
“That’s actually not healthy.”
To his credit, Guan says this particular colleague is passionate about his work and incredibly driven — good qualities in any employee.
But she wants RDC to be around for years to come, and she would like for him to stay on board for the duration.
“Being kind to yourself is so important when you’re playing a long game.”
People who have a healthy balance between their work and personal lives are more likely to do their best work than those who are stressed, burnt out and exhausted.
They’re also more likely to bring a positive mindset into the office, she adds.
They’re not there because they have to do the work, Guan notes. They’re there because they want to do it.
“That’s so important.”
