The logic behind many fintech companies’ automated decisions — whether a customer is approved for a line of credit, for example — is hard-coded in the backend of their applications. This means that if the loan officer, for example, wants to make changes to the lender’s requirements, they must raise a ticket with the IT department.
To transform this kind of automated logic into a more self-service process, Maximilian Eber and Mike Taro Wehmeyer founded Tactile in 2020. The two met while studying at Harvard and were both part of the leadership team at QuantCo, a company building AI. Powered applications for enterprise customers. While there, they discovered that many automated decisions were poorly designed, poorly tested, and required a lot of engineering capacity—ultimately leading to guesswork.
“Based on our experience, we decided to build a platform – Tactile – to enable professionals like chief risk officers to design, evaluate and deploy decision flows on their own without the need for developers,” Wehmeyer said in an email interview. . “Using Taktile, fintechs can adjust their risk selection in an informed way and ensure they only underwrite risks that match their strategy.”
Asked about Tactile’s customer base and financial size, Wehmeyer declined to comment, citing competitive reasons. But investors see potential for growth. Tactile today closed a $20 million Series A round led by Index Ventures and Tiger Global, bringing the startup’s total revenue to $24.7 million. Tiger’s involvement is particularly noteworthy, as the VC firm recently reduced investments, targeting $6 billion for its next fund — about half of its previous investment vehicle.
“The round was arranged by Tiger Global and Index Ventures as they saw strong indications of product-market fit and believed the time was right to expand the business,” said Wehmeyer. “This round will help us accelerate our continued expansion in the US, where we have seen rapid growth, growing our customer base by 4x since the end of last year.”
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For customers, Taktile provides a code-free interface that allows non-technical staff to build, customize and evaluate decision flows. Wehmeyer gave an example: A bank wants to adjust its lending criteria by moving the minimum age from 25 to 21. Apply it.
Users can use Tactile to test off-the-shelf data integrations and monitor the performance of predictive models in their decision flows, Wehmeier said, adding that A/B tests are used to evaluate those flows. Branch, Moss, Rhino, Novo and Vivid Funds are among the fintechs using the platform to process 280,000 decisions every day, he said.
“Since its inception, our technology has been used by advanced lenders that run machine learning models on our platform, processing thousands of variables from alternative data sources to assess the creditworthiness of potential borrowers,” added Wehmeyer.
Tactile holds a lot of confidential data. To allay the fears of privacy advocates, customers and regulators, Tactile says it has developed technology that allows customers to handle decision-making processes and process data locally in the country of their choice — a requirement for many regulatory agencies.
That doesn’t solve the separate but related problem of algorithmic transparency. As recently detailed in The New York Times, some lenders are drawing on outside-the-box data sources to assess creditworthiness, offering consumers opportunities historically denied from some financial products but at the same time raising the risk of bias or making inaccurate predictions.
Tactile puts the onus on its fintech customers to host and deploy data types and models through the platform.
“The decision-making needs of the financial industry are rapidly evolving, especially when applying decision-making through machine learning and optimizing data-driven decision flows,” said Wehmeyer. “These needs are not being met by previous players in the market, so we are competing with in-house solutions that are mostly developed by sophisticated teams.”
Wehmeier sees Noble, a platform for editing and launching credit models, as a rival. But Tactile, which has gone through Y Combinator, insists it has a “healthy” cost structure and plenty in the way of capital to hire talent.
“Before the technology slowdown, fintech was primarily driven by customer growth at any cost. But now investors expect a clear path to profitability, which makes sophisticated risk decision making a tough requirement. “Building complex decision-making systems can take years of work and cost millions of dollars, so customers this way Instead of going away, they’re moving to platforms like Tactile to quickly adapt to these new market dynamics.”
Tactile, which employs a team of 45 people, has offices in New York, London and Berlin. Wehmeyer said he expects the headcount to grow to 70 people by the end of 2023.
