The logic behind many fintech companies’ automated decisions — decisions that determine whether a customer is approved for a line of credit, for example — is hard-coded into the backend of their app. This means that if a chief of credit, for example, wants to make a change to the lending criteria, he or she must raise a ticket with the IT department.
To make changing this type of automated logic a more self-service process, Maximilian Eber and Maik 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 that builds AI-powered apps for enterprise clients. While there, they found that many automated decisions were poorly designed, almost never tested properly, and required a lot of technical capacity, ultimately leading to guesswork.
“Based on our experience, we decided to build a platform – Taktile – to enable experts, such as a risk manager, to design, evaluate and implement decision flows on their own without the need for developers,” Wehmeyer said in an email. email interview. “By using Taktile, fintechs can adjust their risk selection in a data-driven way and ensure they only underwrite the risks that fit their strategy.”
When asked about the size of Taktile’s customer base and financials, Wehmeyer declined to comment citing competitive concerns. But investors apparently see growth potential. Taktile today closed a $20 million Series A round co-led by Index Ventures and Tiger Global, bringing the startup’s total amount raised to $24.7 million. Tiger’s participation is especially noteworthy given that the VC firm recently scaled back investments, targeting $6 billion for its next fund – half the size of its previous investment vehicle.
“The round was pre-empted by Tiger Global and Index Ventures as they saw strong evidence that the product market was a good fit and believed the time was right to scale the company,” said Wehmeyer. “This round will help us further accelerate our continued expansion in the US, where we have seen rapid growth, increasing our customer base by a factor of 4 since the end of last year.”
Image Credits: Tactile
Taktile provides customers with a no-code interface that allows non-technical staff to build, customize, and evaluate decision flows. Wehmeyer gave an example: Suppose a bank wanted to change its lending criteria by raising the minimum age for applying for an account from 25 to 21. implementing it.
Users can also use Taktile to experiment with out-of-the-box data integrations and monitor the performance of predictive models in their decision flows, Wehmeyer said, while running A/B tests to evaluate those flows. He claims that Branch, Moss, Rhino, Novo and Vivid Money are among the fintechs using the platform to make 280,000 decisions every day.
“From the very beginning, our technology has been used by advanced lenders who host machine learning models on our platform, which process thousands of variables from alternative data sources to assess the creditworthiness of potential borrowers,” added Wehmeyer.
It is a lot of sensitive data that Taktile processes. To allay the fears of privacy advocates, clients and regulators, Wehmeyer says Taktile has built technology that enables its clients to host decision-making flows in their country of choice and process data locally — a requirement for many regulators.
That probably doesn’t solve the other but related problem of algorithmic transparency. Like a piece in The New York Times Detailed recently, some lenders are increasingly drawing on external data sources to evaluate creditworthiness, which offers opportunities to consumers who have traditionally been excluded from certain financial products, but at the same time increases the risk of perpetuating biases or making inaccurate forecasts.
Taktile places the responsibility on its fintech clients to communicate through the platform about the types of data and models they host and deploy.
“The decision needs of the financial industry are evolving rapidly, especially when it comes to integrating decisions with machine learning and applying data-driven optimization to decision flows,” said Wehmeyer. “These needs aren’t really met by legacy players in the market, so we mostly compete with in-house solutions built by cutting-edge teams.”
Wehmeyer also sees Noble, a platform that provides a rules-based engine for editing and launching credit models, as a competitor. But he claims that Taktile, which went through Y Combinator, has a “sound” cost structure and has enough capital to hire talent.
“Before the slowdown in technology, fintechs were mostly driven by customer growth at all costs. Now, however, investors expect a clear path to profitability, making advanced risk decisions a hard requirement,” said Wehmeyer. “Building a complex decision-making system takes years of work and costs millions of dollars, so instead of going down this road, customers are turning to platforms like Taktile to quickly adapt to these new, volatile market dynamics.”
Taktile, which employs a team of 45 people, has offices in New York, London and Berlin. Wehmeyer says he expects the workforce to grow to 70 people by the end of 2023.
