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  • Writer's pictureJohn San Filippo

GAC2022 Takeaways: CuneXus + Zest AI = Powerful Lending

By John San Filippo

On Feb. 27, 2022, digital lending storefront provider CuneXus and artificial intelligence (AI) loan decisioning provider Zest AI announced a strategic partnership. Finopotamus had the opportunity to sit down with CuneXus Senior Vice President of Business Development Barry Kirby and Zest AI CEO Mike de Vere at the CUNA Governmental Affairs Conference to gain more insight into the relationship.

Barry Kirby

At the heart of the partnership is an alignment of mission.

“The Zest mission, as we understand it, is trying to create a level playing field, create transparency, and provide a better model than the outdated FICO model,” said Kirby. “Our mission at CuneXus is to create transparency with the credit union and their members to tell them these are the products available to you based upon the risk we're willing to absorb. With our missions already aligned, we started to look at how we can integrate our products.”

Mike de Vere

He continued, “Our clients want to be able to say, just because Barry is not a good risk in the eyes of say, Bank of America, he’s our member and we want to help him. Zest allows credit unions to look beyond FICO scores and help us identify the members that the credit union should be offering loans to, using our system as a distribution hub.”

“I'm excited about the idea from a member experience perspective because it eliminates the friction,” added de Vere. “Just think about it. You're logging in and you're presented with all these [pre-approved] loan opportunities. With our AI decisioning working in the background, a credit union might achieve a 25% increase in approvals, so you’re saying yes to more members. That’s what we’re geeked out about.”

AI-based loan decisioning doesn’t affect decisions for people with high FICO scores; de Vere noted; rather, he said, it’s the people with lower FICO scores that are more likely to get a positive loan decision. This naturally leads to greater inclusion and more service to the traditionally underserved.

“The model itself is more inclusive towards protected classes like female borrowers,” said de Vere. “I'm super proud of that.”

“Traditionally a credit union said if the member’s FICO is 700, we can offer them these five things,” added Kirby. “That's great for one third of the member base, there's also two thirds of the members who aren’t being served as well as they could. Zest changes that.”

Kirby sees this as critical to the survival of credit unions. “We need members fully entrenched in the credit union market to stay with their credit union,” he said. Ultimately what we do is we build wallet share to make sure that member doesn't leave. We do that by creating a transparent digital storefront. Zest will help by bringing in new members into that storefront.”

de Vere claimed that the partnership is already generating excitement in Zest’s client base. “The number of inbound calls that we've had since the announcement has been insane,” he said.

Both executives agree that this partnership is positioned to disrupt a system that needs disrupting.

“The current lending system is failing America,” said de Vere. “It was put in place when Elvis was at the top of the charts and there were poodle skirts. There’s a better way now.” He added that “if you consume more data and apply better math, you're going to have a better outcome.”

The key is leveraging that data in a proactive way.

“If you're waiting for that member to seek credit, they're not really your member anymore,” said Kirby. “They're seeking credit from anybody who will give it to them. So if you're going to play the reactionary game, good luck, because our credit unions are going to lap you all day long.”

“It's a win-win for the credit unions and their members alike,” concluded de Vere. “When a credit union approves more loans, everybody is happy.”

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