A Secure Bank Loan Prediction System by Bridging Differential Privacy and Explainable Machine Learning
Muhammad Minoar Hossain, Mohammad Saiful Islam Mamun, Arslan Munir, Mohammad Motiur Rahman, Safiul Haque Chowdhury
Abstract
Bank loan prediction (BLP) analyzes the financial records of individuals to conclude possible loan status. Financial records always contain confidential information. Hence, privacy is significant in the BLP system. This research aims to generate a privacy-preserving automated BLP scheme. To achieve this, differential privacy (DP) is combined with machine learning (ML). Using a benchmark dataset, the proposed method analyzes two different DP techniques, namely Laplacian and Gaussian, with five different ML models: Random Forest (RF), Extreme Gradient Boosting (XGBoost), Adaptive Boosting (AdaBoost), Logistic Regression (LR), and Categorical Boosting (CatBoost). Each of the DP techniques is evaluated by varying distinct privacy parameters with 10-fold cross-validation, and from the outcome analysis, optimal parameters are nominated to balance privacy and security. The analysis indicates that applying the Laplacian mechanism with a DP budget of 2 and the RF model achieves the highest accuracy of 62.31%. For the Gaussian method, the best accuracy of 81.25% is attained by the CatBoost model in privacy budget 1.5. Additionally, the proposed method uses explainable artificial intelligence (XAI) to show the conclusion capability of DP-integrated ML models. The proposed research shows an efficient method for automated BLP while preserving the privacy of personal financial information and, thus, mitigating vulnerability to scams and fraud.