Credit models matter. They decide whether that hopeful couple gets the loan for their home renovation, or if a budding entrepreneur receives the loan they need to kickstart their business. In other words, credit models can have an outsized impact on who receives access to funding, how much access, and on what terms.
Given the influence credit models have, it’s necessary to contemplate how credit risk modeling has evolved over the years, especially when considering the introduction of innovative artificial intelligence (AI) and machine learning (ML) technologies to traditional risk modeling techniques.
With a view toward increased efficiency, speed to market, and improved accuracy, AI and ML innovations have allowed some lenders to scale their operations significantly and provide borrowers quicker decisions and access to capital. However, as credit models become increasingly automated, complex, and potentially more opaque due to AI/ML, outcomes and variables affecting those outcomes have become more challenging to understand and explain.
That's why we were excited when Zeal Capital Partners, a Truist-backed venture fund investing in diverse management teams, introduced us to Stratyfy, a machine-learning fintech firm focused on increasing transparency and reducing bias in credit decisioning.
With Zeal having participated in Stratyfy's previous funding round in 2021, their team saw an opportunity to leverage Truist Ventures’ platform to support the development of Stratyfy's roadmap:
"As a highly responsive and collaborative partner, Truist Ventures was among the first of our LPs to meet with Stratyfy and meaningfully support its mission through its expertise and experience."
- Andy Will, Principal @ Zeal Capital Partners
In 2022, Truist Ventures assembled a group of Truist domain experts and executives to meet with Stratyfy to provide feedback on their solution:
"Truist Ventures quickly provided valuable access to deep domain expertise across the Truist lending and risk teams. Gaining support and detailed feedback from senior executives at a top 10 U.S. bank provided significant market validation, refined our product roadmap and naturally led to an opportunity to deepen the relationship."
- Laura Kornhauser, Cofounder & CEO @ Stratyfy
Having implemented Truist's feedback into the product, Stratyfy brought its solution back to the same group of experts and leaders several months later. That session led to Truist financially supporting Stratyfy's mission of creating greater transparency and making unbiased financial decisions to positively affect millions of people.
Truist Ventures is excited to co-lead an Institutional Seed investment in Stratyfy with Zeal Capital Partners. This investment underscores our belief that it is incumbent on leaders in the financial community to investigate and pursue improved methodologies that can increase transparency and trust, and reduce the population of the underbanked or unbanked.
Cofounded and led by Laura Kornhauser, a Women in FinTech Powerlist honoree, Stratyfy uses AI to identify lending biases and provide more equitable access to capital, while unlocking new customers for greater profitability. Lenders can apply Stratyfy's solutions efficiently to perform credit risk assessments, fraud detection and mitigation, and bias mitigation. Stratyfy's Probabilistic Rules Engine (“PRE”) is seen as a key differentiator in the AI modeling market as it provides lenders increased visibility and control over models used to automate lending decisions.
Stratyfy’s team and their solutions are already having a significant impact. Customers are reporting improved revenue-driving outcomes, as well as enhanced model transparency and greater control over potential AI bias.
Truist Ventures invests in companies to discover innovative technologies, commercialize impactful solutions and positively support our communities. Investing in Stratyfy is an opportunity to do all three and represents the various ways Truist Ventures can be a part of the development and growth of mission-driven, disruptive startups with our platform of senior executives and technical expertise.
Stratyfy is a phenomenal example of the kinds of companies we seek to support, and we’re proud to do so with our partners at Zeal.