Evaluation Of Algorithmic Bias Potential In Ai Systems Within The Framework Of Personal Data Protection Laws

Fara Via Alvida; Tiara Saresty Dinda Pregiwati; Tiara Saresty Dinda Pregiwati; Fachry Satrio Pringgowidigdo; Khadijatun  Nazmi; Muhammad Naufal Nabil Aufa; Yoga Galih Husodo

Authors

Fara Via Alvida Universitas Muhammadiyah Surakarta Author
Tiara Saresty Dinda Pregiwati Faculty of Law and Political Science, Muhammadiyah University Surakarta Author
Tiara Saresty Dinda Pregiwati Faculty of Law and Political Science, Muhammadiyah University Surakarta Author
Fachry Satrio Pringgowidigdo Faculty of Law and Political Science, Muhammadiyah University Surakarta Author
Khadijatun Nazmi Faculty of Law and Political Science, Muhammadiyah University Surakarta Author
Muhammad Naufal Nabil Aufa Faculty of Law and Political Science, Muhammadiyah University Surakarta Author
Yoga Galih Husodo Faculty of Law and Political Science, Muhammadiyah University Surakarta Author

Keywords:

Bias Algorithm, financial services sector, digital transformation, Artificial Intelligence, PDP

Abstract

Digital transformation has brought significant changes to the financial services sector, particularly through the application of Artificial Intelligence (AI) in customer risk analysis. AI improves efficiency and accuracy, but the extensive use of sensitive personal data raises risks of privacy violations, data misuse, and algorithmic bias, which can undermine fairness. Indonesia enacted Law Number 27 of 2022 on the Protection of Personal Data (UU PDP) as the legal foundation, yet this regulation has not fully anticipated the challenges and complexities of AI technology, such as algorithm transparency, independent audits, and accountability for automated decisions. This study employs normative legal research with statutory, conceptual, and case approaches to assess how well the UU PDP accommodates AI developments and the impact of algorithmic bias in customer risk analysis. The findings indicate that current regulation needs to be strengthened with specific technical rules, the establishment of independent supervisory bodies, and the implementation of AI governance in financial institutions. This research recommends adaptive regulations and inter-agency coordination to ensure effective and fair personal data protection in the digital era.

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