Zest AI, a leader in software for credit underwriting, announced a $15M capital injection from Insight Partners, a leading global software investor. The funds will be used to accelerate the adoption of Zest’s Model Management System for creating and deploying powerful, explainable, and compliant AI-based credit underwriting models. The investment will also fund Zest’s efforts to drive more rigorous technologies and standards around algorithmic fairness, with the goal of de-biasing the consumer lending industry.
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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. Banks, credit unions, and corporations who lend using Zest-built models 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 own data and the advanced math of machine learning.
The Insight investment will also strengthen Zest’s fair lending 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.
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“The Zest team has deep domain expertise in both lending and explainable AI and this has led to strong product-market fit; however, what has really excited us is the opportunity to tilt the lending landscape toward equity and inclusion,” says Deven Parekh, Managing Director at Insight Partners. “It’s not every day you get to use proven technology to directly impact the economic opportunity gap in the U.S.” Insight MD Lonne Jaffe will be joining the Zest board with Jon Rosenbaum joining as a board observer. Other current Zest investors include Matrix Partners, Lightspeed Capital, and Upfront Ventures.
“We’re thrilled to have the Insight team on our side and their timing couldn’t be better,” said Mike de Vere, CEO of Zest AI. “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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