FUTURE OF LOAN APPROVALS USING EXPLAINABLE AI

The rapid adoption of Artificial Intelligence (AI) in financial services has significantly transformedtraditional loan approval processes. However, the opacity of "black-box" models raises concerns aroundfairness, transparency, and accountability. This paper explores the integration of Explainable AI (XAI) inloan approval systems to make decision-making processes interpretable, justifiable, and compliant withglobal regulations. The research highlights various XAI techniques, such as SHAP, LIME, andcounterfactual explanations, while outlining their impact on trust, speed, and regulatory alignment infinancial institutions.