Rachel (not her real name) has a small business selling various indigenous products ranging from ingredients of traditional beer to the homemade beer, cloth for traditional dresses to the complete customer ordered dress, etc. Her monthly income ranges from 15,000 to 20,000 a month. Last month she had an unexpected bonus when a musical group ordered dresses valued at over 200,000. Being a shrewd businesswoman she invested 50,000 in paying her rent for 8 eight months in advance as well as stocking up her food so she will only need to replenish at the end of February next year. After all she has learnt the hard way what happens during Januworry. Her company has continued making its usual income and she feels quite secure in her present position and is even thinking of expanding and adding another staff member. However, quite unexpectedly as Death tends to be, her brother passed away and the funeral arrangements with the obligatory trip to the north for the funeral have depleted all her savings that she needed to cope with till end of the month.
Upon her return from the funeral she decides to visit the bank to get a loan of N$ 1,500 to pay for every day expenses till she gets her payment of N$20,000 for an order that already been delivered. She visits her ban and has all her paperwork in order. She even has a certified copy of the death certificate to show why she needs a loan. The bank turns down her loan application when she approaches the front desk and does not even send her in to see a manager. She requests to see the bank manager but is explained that regardless of whether she sees the manager, the “system” has already turned down her application. It is explained that her account was now in debit of - N$ 123.00 and her clients have not done their payments via electronic funds transfer (EFT). The computer has indicated that she is not trustworthy for a loan and no staff member can overwrite that instruction.
It is important to remember at this point that the banks make their money by loaning their customers money which they must make repayments – with the additional interest charged being the profit they make.
At some point, the top managers of banks, of which very few these days have come through the ranks from being tellers working with customers, decided to use computers to make decisions on whether the historical data should give out loans. According to international norms, “information about your past payment history gives a more accurate prediction of your future actions”.
Let us take this analogy and use it to consider whether a person will smoke in the future. According to the financial industry model, if a person who has smoked in the past, they are most likely to smoke again. They would not consider has the person stopped smoking, but only that they have smoked. It is thus clear that according to the banking (perhaps insurance too) fraternity, you are what you have always been and will probably not change.
Giving the decision making power of whether you may qualify for a loan based on an algorithm that cannot have the compassion of the present situation of the customer must not be allowed to become normal practice. The most worrying factor is when these algorithms make decisions based on our ethnicity, marital status, or any other arbitrary factors decided by computer programmers away from the reality of life, we will be less for it.
No computer will ever be able to make decisions based on the unexpected happenings life throws our way.
