Taktile raises $20 million to help fintech companies test and implement decision-making models • TechCrunch
The logic behind many fintech companies’ automated decisions – decisions that determine whether, for example, a customer is approved for a line of credit – is hardcoded into the app’s backend. This means that if, for example, a credit manager wants to make a change in the lending criteria, they must collect a ticket from the IT department.
To make changing this kind of automated logic a more self-service process, Maximilian Eber and Maik Taro Wehmeyer founded Taktile 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 business customers. While there, they found that many automated decisions were poorly designed, almost never properly tested, and required a lot of engineering capacity—which ultimately led to guesswork.
“Based on our experience, we decided to build a platform – Taktile – to empower experts, such as a CRO, 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 pool in a data-driven way and ensure they only underwrite the risks that align with their strategy.”
Asked about the size of Taktile’s customer base and finances, Wehmeyer declined to comment, citing competitive reasons. But investors apparently see growth potential. Taktile today closed a $20 million Series A round led by Index Ventures and Tiger Global, bringing the startup’s total funding to $24.7 million. Tiger’s participation is particularly notable given that the VC firm has recently scaled back its investments, targeting $6 billion for its next fund — half the size of its previous investment vehicle.
“The round was made by Tiger Global and Index Ventures when they saw strong indications of product-market fit and believed the time was right to start scaling the business,” Wehmeyer said. “This round will help us further accelerate our ongoing expansion in the US, where we have seen rapid growth, increasing our customer base by 4x since the end of last year.”
Image credit: Tactile
To customers, Taktile offers a code-free interface that allows non-technical employees to build, adjust and evaluate decision flows. Wehmeyer gave an example: Let’s say a bank wanted to adjust its lending criteria by moving the minimum age to apply for an account from 25 to 21. Taktile would have the credit manager at the bank back-test the change and analyze the impact before actually implementing it.
Users can also leverage Taktile to experiment with standard data integrations and monitor the performance of predictive models in their decision-making flows, Wehmeyer said, and conduct A/B tests to evaluate those flows. He claims that Branch, Moss, Rhino, Novo and Vivid Money are among the fintechs that use the platform to manage 280,000 decisions every day.
“Since its inception, our technology has been used by advanced lenders that host machine learning models on our platform, which process thousands of variables from alternative data sources to assess the creditworthiness of potential borrowers,” Wehmeyer added.
There is a lot of sensitive data that Taktile handles. To allay the fears of privacy advocates, customers and regulators, Wehmeyer says Taktile built technology that enables customers to host decision-making flows in their country of choice and process data locally — a requirement for many regulatory agencies.
It probably won’t solve the different but related problem of algorithmic transparency. As a piece in The New York Times recently described, some lenders are increasingly drawing on outside-the-box data sources to evaluate creditworthiness, presenting options to consumers historically locked out of certain financial products, but also increasing the risk of perpetuating biases or makes inaccurate predictions.
Taktile places the responsibility on its fintech customers to communicate the types of data and models they host and distribute via the platform.
“The decision-making needs of the financial services industry are evolving rapidly, particularly in infusing decisions with machine learning and using data-driven optimization of decision flows,” Wehmeyer said. “These needs aren’t really being met by legacy players in the market, so we’re mostly competing with in-house solutions built by sophisticated teams.”
Wehmeyer also sees Noble, a platform that provides a rules-based engine for editing and launching credit models, as a rival. But he claims that Taktile, which went through Y Combinator, has a “healthy” cost structure and plenty of capital to hire talent.
“Before the tech downturn, fintech was mainly driven by customer growth at any cost. Now, however, investors expect a clear path to profitability, making sophisticated risk decisions a difficult requirement,” Wehmeyer said. “Building a complex decision system takes years of work and costs millions of dollars, so instead of going down this path, turn to 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 number of employees to grow to 70 people by the end of 2023.
