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 application. This means that if a head of credit, for example, wants to make a change in the lending criteria, he needs to raise a ticket with the IT department.
To make changing this type of automated logic more of a self-service process, Maximilian Eber and Mike Taro Wehmeyer founded Tactile in 2020. The two met while studying at Harvard and were part of the leadership team at QuantCo, a company that builds AI-based applications for enterprise clients. While there, they discover that many automated solutions are poorly designed, almost never properly tested, and require a lot of engineering capacity – ultimately leading to guesswork.
“Based on our experience, we decided to build a platform – Taktile – to enable experts, such as a CRO, to design, evaluate and deploy solution flows themselves, without the need for developers,” Wehmeyer said in an interview via e-mail . “Using Taktile, fintech companies can adjust their risk selection in a data-driven way and ensure they only take on the risks that align with their strategy.”
Asked about the size of Taktile’s customer base and financials, Wehmeyer declined to comment, citing competitive reasons. But investors clearly see potential for growth. Taktile today closed a $20 million Series A round co-led by Index Ventures and Tiger Global, bringing the startup’s total raised to $24.7 million. Tiger’s involvement is particularly notable given that the venture capital firm recently scaled back investments, targeting $6 billion for its next fund – half the size of the previous investment vehicle.
“The round was led by Tiger Global and Index Ventures as they saw strong indications of product market fit and believed the time was right to begin 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.”
To customers, Taktile offers a code-free interface that allows non-technical employees to build, debug and evaluate solution flows. Wehmeyer gave an example: Let’s say a bank wants to change its lending criteria, moving the minimum age to apply for an account from 25 to 21. Taktile will allow the bank’s head of credit to test the change and analyze its impact before actually implementing it.
Users can also use Taktile to experiment with out-of-the-box data integrations and monitor the effectiveness of predictive models in their decision flows, Wehmeyer said, running A/B tests to evaluate those flows. He claims that Branch, Moss, Rhino, Novo and Vivid Money are among the fintech companies that use the platform to power 280,000 decisions every day.
“Since the beginning, our technology has been used by advanced lenders who host machine learning models on our platform that process thousands of variables from alternative data sources to assess the creditworthiness of potential borrowers,” added Wehmeyer.
Taktile processes very sensitive data. To allay the fears of privacy advocates, customers and regulators, Wehmeyer says Taktile has built technology that allows its customers to host solution flows in the country of their choice and process data locally – a requirement for many regulatory agencies .
This probably won’t solve the different but related problem of algorithmic transparency. As a piece in New York Times recently detailed, some lenders are increasingly drawing on out-of-the-box data sources to assess creditworthiness, providing options to consumers that have historically been prohibited for certain financial products, but at the same time increasing the risk of perpetuating bias or making inaccurate predictions.
Taktile puts the onus on its fintech customers to communicate the types of data and models they host and deploy through the platform.
“The decision-making needs of the financial industry are evolving rapidly, especially when it comes to infusing decisions with machine learning and applying data-driven optimization to decision flows,” Wehmeyer said. “These needs aren’t really being met by legacy players in the market, so we’re competing primarily with in-house solutions built by sophisticated teams.”
Wehmeyer also sees Noble, a platform that provides a rule-based engine for editing and running credit models, as rival. But he argued that Taktile, which went through Y Combinator, has a “healthy” cost structure and enough capital to hire talent.
“Before the tech slowdown, fintech was primarily driven by customer growth at any cost. However, investors now expect a clear path to profitability, making advanced risk decision-making a difficult requirement,” said Wehmeyer. “Building a complex decision-making system takes years of work and costs millions of dollars, so instead of going down that path, 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 by the end of 2023.