Dave Girouard, the chief executive of the AI lending platform Upstart Holdings Inc. UPST, -2.51% in Silicon Valley, understood the worry. "The concern that the use of AI in credit decisioning could replicate or even amplify human bias is well-founded," he said in his testimony at the hearing. But Girouard, who co-founded Upstart in 2012, also said he had created the San Mateo, Calif.-based company to broaden access to affordable credit through "modern technology and data science." And he took aim at the shortcomings he sees in traditional credit scoring. The FICO score, introduced in 1989, has become "the default way banks judge a loan applicant," Girouard said in his testimony.

Between 2014 and 2017 Amazon tried to build an algorithmic system to analyze resumes and suggest the best hires. An anonymous Amazon employee called it the "holy grail" if it actually worked. After the company trained the algorithm on 10 years of its own hiring data, the algorithm reportedly became biased against female applicants. The word "women," like in women's sports, would cause the algorithm to specifically rank applicants lower. After Amazon engineers attempted to fix that problem, the algorithm still wasn't up to snuff and the project was ended.

Artificial intelligence is changing the way we recruit across almost all categories. We know that the technology can improve success in acquiring candidates, but what we need to discover whether it can go further when predicting candidate potential. AI is fueled by data: The more information you give it, the more it can tell you. But, as with all technology, it's only as smart as the data it has. So the better the information you give it, the better the results.

Digital lenders are pulling in all kinds of data, like purchases, SAT scores and public records. Digital lenders are pulling in all kinds of data, like purchases, SAT scores and public records. The terms of the next loan you get might depend less on your credit score and more on what a computer program thinks of your habits. Digital lending is expected to double in size over the next three years, reaching nearly 10 percent of all loans in the U.S. and Europe. There are now some 2,000 digital startups, many of which are using artificial intelligence to analyze the troves of data created every day.