Racist and sexist artificial intelligence (AI) bots pose a risk to the financial system, Bank of England officials have warned.

Self-teaching algorithms could be able to pick up biases from datasets and wider society, according to a new report from the Bank’s fintech hub, which could then be used to discriminate against customers or staff in the workplace.

Kathleen Blake, an analyst at the Bank of England who authored the report, said this could create problems for banks, insurers and the financial system as a whole. 

She said potential AI discrimination could “exacerbate” risks to financial stability by undermining trust in the system. 

The use of “biased or unfair AI” could lead to reputational and legal risk for firms, Ms Blake added, which could then be scrutinised by regulators. 

Ms Blake noted a number of high-profile AI mishaps, including an algorithm used by Apple and Goldman Sachs to aid with decisions on credit card applications which reportedly offered lower credit limits to women than men. 

This issue was scrutinised by the New York State Department of Financial Services, which in 2021 found it was not deliberate but “showed deficiencies in customer service and transparency”.