automated employment decision tools to ensure they do not produce disparate impacts based on race or gender. The European Union’s AI Act takes it further, classifying certain employment-related AI systems as “high risk” and subjecting them to strict oversight. AI also raises questions of accountability. If an algorithm makes an unlawful decision that results in the rejection of a qualified candidate for discriminatory reasons, who is responsible? The software vendor? The HR department? The company leadership? Without clear accountability structures and a justice system slow to catch up with the fast pace of AI, employees and applicants may find it difficult to seek recourse. How Financial Institutions Can Implement AI Tools in Hiring Despite these risks, AI will likely remain a central fixture in hiring. Organizations seeking to use these tools must take a cautious and informed approach and focus on careful oversight. To mitigate bias and ensure fairness, institutions should conduct regular audits, use AI only as a decision-support tool and maintain human oversight throughout the hiring process. Ultimately, transparency is key. Candidates should be made aware when AI is involved in a hiring process and offered explanations or alternatives where possible. Compliance with federal, state and local employment and data privacy laws is essential, as is ensuring that AI systems evaluate only job-relevant criteria. By building an internal framework and ensuing policies and monitoring tools are adapted over time, financial institutions can successfully harness the efficiency of AI while still upholding their obligations and ethical standards. Amundsen Davis LLC is a Diamond Associate Member of the Indiana Bankers Association. Joey K. Wright Attorney Amundsen Davis LLC JWright@AmundsenDavisLaw.com As an attorney with nearly a decade of experience, Joey uses her knowledge and voice to make a difference for her clients and their businesses. She thoughtfully represents employers facing a variety of employment issues, including hiring and firing, discrimination and harassment, compensation, and discipline. Information in this article is provided for general information purposes only and does not constitute legal advice or an opinion of any kind. You should consult with legal counsel for advice on your institution’s specific legal issues. Experience & Expertise You Can Trust Banc Consulting Partners is a leader in designing, implementing, and administering BOLI and non-qualified benefit programs for bank officers and directors. With decades of experience, we provide tailored solutions that align with your strategic goals while ensuring regulatory compliance. EXPERIENCE & EXPERTISE YOU CAN TRUST Banc Consulting Partners is a leader in designing, implementing, and administering BOLI and non-qualified benefit programs for bank officers and directors. With decades of experience, we provide tailored solutions that align with your strategic goals while ensuring regulatory compliance. September/October 2025 39
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