[miked]

I know this debate has been had many times before but I'm bringing it back up. Just read a news story about kabbage and zestfinance. some takeaways:

"ZestFinance employs a host of untraditional signals — such as whether or not a would-be borrower has read a letter on its website — to determine if someone is credit-worthy."

"One example is ZestFinance, a new style of underwriting company that uses 70,000 data signals and ten parallel machine learning algorithms to assess personal loans."

" The lending firm Kabbage, for instance, taps into data like a company’s UPS activity to assess their financial health — everything from the volume of shipping to the size of the parcels provide signals about how a firm is doing."

"Kabbage is offering more loans than banks to internet-based businesses"

http://gigaom.com/2013/03/20/forget-...-underwriting/

raise your hand if you are looking at more than just fico score and daily ending bank balance.

[Capital Stack]

algorithms will be a big part of this industry moving forward.

[MCAVeteran]

"70,000 data signals and ten parallel machine learning algorithms to assess personal loans."

sounds like something out of a sci fi movie. ten parallel machine algorithims.. what if it becomes like the movie minority report and we can determine if a borrower will default before it happens! The system can be called "Predefault".

Which funder will grab the precognitive potential of three genetically altered humans to prevent defaults? TBD...Spieldberg? Anyone wanna bit on story/movie?

[Chambo]

Basically, they are saying that the old way of doing things (banks balances and FICO scores) will soon be a thing of the past.

I would have said that was nuts a year or so ago....then I see this On Deck portal that gives me a prequal and terms in 5 minutes.

[cashguy]

Chambo: does it really give prequal ? Or just approve bases on credit. The real next level is approval with numbers and stips in 5 min. That's where this is going shortly.

[Sean Cash]

70,000 data signals sounds kind of exaggerated lol. In Dr evil voice: "Why use 1 million signals when you could use.... 1 billion."

I think the whole holdup of waiting for merchants to "find" their bank statements, faxing them, or waiting for their bank to send them a copy is going to be a thing of the past. It's incredibly inefficient this way and opens up too many possibilities that the documents will be manipulated, altered, or interpreted wrong by a human. Everything will be pulled via APIs, all bank transactions going back a year, merchant account transactions etc. It will all be analyzed instantly by a computer. Intuit already has APIs available where you can import all data merchants have entered via quickbooks. In 1 split second, you have their p&l, balance sheet, all journal entries, all merchant account transactions, details on all open invoices, everything.

[miked]

"70,000 data signals and ten parallel machine learning algorithms to assess personal loans."

sounds like something out of a sci fi movie. ten parallel machine algorithims.. what if it becomes like the movie minority report and we can determine if a borrower will default before it happens! The system can be called "Predefault".

Which funder will grab the precognitive potential of three genetically altered humans to prevent defaults? TBD...Spieldberg? Anyone wanna bit on story/movie?

Total movie spoiler mcavet. I hadn't seen that one yet! I read ten parallel machine algorithms as going in the other direction, where we are in the future and underwriting terminators are not only killing deals outside risk parameters, but the entire human race as well. ZestFinance = Skynet.

[Chambo]

Chambo: does it really give prequal ? Or just approve bases on credit. The real next level is approval with numbers and stips in 5 min. That's where this is going shortly.

It gives you the prequal, terms and everything.

[Andy]

From my understanding, it is just a preliminary prequal to give you an approximate idea of what the approval will be, or if it will not be approved. 8 times out of 10 the actual approvals after it goes through underwriting are a little different then the instant prequal numbers. In my experience.

[skideeppow]

i have lost a couple deals to Kabbage, what are they? A trad lender or MCA company?

[Capital Stack]

They are effectively an MCA funding company. They just UW differently leveraging the technology. check this article out click here:

i have lost a couple deals to Kabbage, what are they? A trad lender or MCA company?