Fintech CEO Suggests Sandbox For Nontraditional Data Use

Law360 (July 25, 2019, 9:47 PM EDT) -- Nontraditional data sets allow fintech lending companies to provide cheaper loans to more customers but their use raises questions of bias and discrimination, a congressional task force heard Thursday, as an industry executive suggested a regulatory sandbox to ensure the appropriateness of lending models.

The U.S. House Financial Services Committee fintech task force held its second-ever hearing to discuss the use of alternative data in lending, where David Girouard, co-founder and CEO of fintech lending company Upstart, proposed a regulatory sandbox to test algorithmic models using such data.

Using alternative data, such as education or employment history, in lending algorithms allowed...

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