← Glossary

Glossary · XAI

Explainable AI

Explainable AI (XAI) is the ability to state, in human terms, why a model produced a particular output. In lending and insurance it means giving specific, accurate reasons for a decision — not just a score.


Explainability is often a legal requirement: US adverse-action rules (ECOA / Regulation B, per CFPB Circular 2022-03) require specific principal reasons even when a complex algorithm is involved, and GDPR Article 22 gives a right to human review of solely automated decisions.

A useful distinction is global (how the model behaves overall) versus local (why this one decision was made) — adverse-action law is about local explanations.

Related terms

Learn more