Zest AI Secures Investment From Insight Partners To Speed Adoption of Fairer And More Powerful Credit Underwriting Models
Zest AI team
October 20, 2020
“It’s not every day you get to use proven technology to directly impact the economic opportunity gap in the U.S.” When Insight Partners Managing Director Deven Parekh said that the other week I knew we had a great partnership in store. Zest’s mission is to make fair credit available to everyone, and today we’re lucky to be announcing a $15 million capital injection from Insight Partners, a leading global software investor.
The funds will be used to accelerate the adoption of our Model Management System for creating and deploying powerful, explainable, and compliant AI-based credit underwriting models. The investment is particularly targeted at funding our efforts to drive more rigorous technologies and standards around algorithmic fairness, with the goal of de-biasing the consumer lending industry.
“The Zest team,” says Deven, “has deep domain expertise in both lending and explainable AI and this has led to strong product-market fit; however, what has excited us is the opportunity to tilt the lending landscape toward equity and inclusion.” Insight managing director Lonne Jaffe will be joining the Zest board with Jon Rosenbaum joining as a board observer. They’re going to be a powerful force behind us, along with our current investors Matrix Partners, Lightspeed Capital, and Upfront Ventures.
Zest software helps banks and credit unions go beyond the statistical and data limitations of traditional credit scores to identify good borrowers who are often overlooked by legacy techniques. Lenders who build models using our software have seen, on average, a 20% increase in approval rates with no added risk, and up to 50% reductions in charge-offs by using more of their data and the advanced math of machine learning.
The Insight investment will strengthen our across-the-board efforts to drive better fair lending in the U.S. credit economy. (Read this story by FORTUNE’s Jeremy Kahn for a solid take on the state of play in AI lending.) Regulators have called our software the emerging gold standard in the industry for de-biasing any underwriting model to safely approve more deserving borrowers of color. Most lenders think of model fairness as a trade-off with performance. No longer. Using Zest’s fair lending software, one lender was able to shrink the disparity in approval rates between white applicants and applicants of color by 30%, on average, with no increase in portfolio risk. An auto lender was able to approve thousands of more borrowers for no more than the cost of a cup of coffee per loan.
We’re thrilled to have the Insight team on our side. They specialize in scaling up high-growth technology and software companies that are driving transformative change in their industries. And that’s us! Our customers want to spread economic opportunity more widely, but they’ve lacked the tools to make it easy to do the right thing. With Insight on the team, we have the resources and commitment to bring the power of ML and new standards in fairness to every financial institution in the world.
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