VyStar CU, Bank and Venture Firm Invest $18M in AI Company
Zest AI says it will use funds to accelerate adoption of fairer loan decision technology.
VyStar Credit Union has joined with a bank and a venture capital firm to invest $18 million in Zest AI, a Los Angeles-based developer of software for credit underwriting.
Zest AI announced the capital injection Thursday, which it said was led by strategic investors VyStar CU of Jacksonville, Fla. ($10.7 billion in assets, 764,701 members) and First National Bank of Omaha, which has $25.5 billion in assets and 119 branches in Nebraska, Colorado, Illinois, Iowa, Kansas, South Dakota and Texas. Also contributing was returning investor Northgate Capital, a San Francisco based venture capital company.
The funds will be used to accelerate the adoption of Zest AI’s Model Management System for creating and deploying explainable and compliant AI-based credit underwriting models. The investment will also fund Zest AI’s efforts to drive more rigorous technologies and standards around algorithmic fairness, with the goal of reducing bias in consumer lending.
Zest AI also announced that VyStar CLO Jenny Vipperman will be joining Zest AI’s board of directors.
This announcement comes as Zest AI works to deepen its relationships with credit unions across the country. Earlier this month, Zest AI was named a CUNA Strategic Services alliance provider of AI-driven lending to credit unions nationwide.
“Jenny shares our mission to make fair credit available to everyone,” Zest AI CEO Mike de Vere said. “Rarely do you meet someone who cares as much as Jenny does about helping others. Jenny also brings deep insight into the specific needs of credit unions — the fastest-growing portion of our customer base.”
Vipperman said the job of financial industry leaders is to invent new and better ways to serve members.
“To me that means fairer, faster and more accurate credit decisions,” she said. “This investment will help ensure that more credit unions can make the same leap forward.”
Zest AI software is designed to help 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. Zest AI said its models generate up to 20% increases in approval rates with no added risk, and up to 50% reductions in charge-offs by using more data and the advanced math of machine learning.