Entrepreneurs have long been an engine of our economy. Whether it’s a local restaurant or a small factory, making sure that good ideas turn into jobs and wealth is a key ingredient for strong and stable communities. For those willing to work hard and take a risk, a small-scale loan can be a key ingredient to make an entrepreneurial dream a reality. But I’m concerned that new lending companies aren’t taking the necessary steps to ensure that all Americans with a solid business idea — regardless of their race or ethnicity — are able to access fair and affordable business credit due to potentially discriminatory fintech algorithms.
Fintech companies are a new and innovative way to provide consumers and small businesses the opportunity to gain access to capital at lower costs than traditional banks by eliminating the “middleman.” However, with a relatively new and expanding model, it is critical that we be certain these innovative companies are not targeting those most susceptible to financial risks with predatory or discriminatory lending practices. There are serious concerns that some of these fintech companies are developing algorithms that may lead to outcomes that disproportionately harm minority-owned businesses.