Only 15 months after being in danger of collapse, artificial intelligence-powered credit risk management software company Rich Data Corporation has secured $15 million in a round led by BMY Group, with the funds set to propel its growth in Australia and New Zealand.
Rich Data was founded in 2016 by former Westpac program manager and Oracle global client adviser senior director Ada Guan, alongside fellow Oracle colleague Gordon Campbell and Ms Guan’s brother, Charles, who formerly was an enterprise architect at the NSW Department of Justice.
The trio started the business in the hopes of improving financial inclusion by building credit risk models it says are more accurate. They take into account data from a range of sources including from telecommunications companies, smart home devices, tax returns, point of sales data, and social media networks such as Facebook.
Rich Data’s Delta product enables lenders to more accurately predict the future behaviour, revenue and expenses of small businesses and individuals with a thin credit record, or no credit history, and enables lenders to demonstrate the logic behind their prediction and decision.
Described as a “glass box” AI, banks and financial services companies using the Delta product are able to see inside the AI algorithm and understand why it made the recommendation it did.
Speaking to The Australian Financial Review, Ms Guan said the company had started out focused on offshore markets, particularly in Asia and North America, but had been forced to focus in its home market of Australia when the pandemic hit last year.
“With business-to-business products, you need to meet people – especially for disruptive transformation plays,” she said.
“Not being able to have physical interactions and look people in the eye created a tremendous challenge.
“It was a near-death experience for Rich Data Corporation. It was tremendously difficult for us … But we started to see that the demand in this market was tremendously high and realised we’d perhaps overlooked the demand in Australia.”
Despite having done deals with a large telecommunications company in Vietnam, a sub-prime lender in Canada called Cashmax and formed a strategic partnership with Chinese cloud computing and big data services provider Inspur (to work with its government clients to assist banks to use government data to allow lenders to extend credit to more SMEs), when COVID-19 took hold, its offshore revenue dried up.
Things were looking dire for the business until it inked a deal with big four bank NAB, which in December said it was testing Rich Data Corp’s AI to determine how it interacts with existing credit processes. The bank hopes it will help it shift toward real-time loan assessments.
“Before revenue was all from overseas, but from last year a huge portion is now in Australia and New Zealand,” Ms Guan said.
“[As well as the pandemic] we saw a lot of slowdown, or change, in the regulatory environment [in China] … in terms of what data can and can’t be used… which also impacted our revenue path.
“China is still an attractive and interesting market. But we can’t attack all markets. The US market is tremendously attractive … it has about 5000 banks, and China had 2500, so that’s the population we’re into.”
Melbourne-based investor BMY Group led the latest capital raising.
BMY Group’s Eric Gao, who is joining the Rich Data Corp board, said he thought it had the makings of a future unicorn.
“We always enjoy working with founders with a purpose. Ada has always said this is about financial inclusion and that attracted me to the business the first time we spoke,” he said.
“It’s important for the whole economic recovery. We need more SME lending post-COVID as part of the recovery.
“Initially Ada was planning to raise $US2 million ($2.6 million) to $US3 million, but the more we looked at it, we realised we needed to super charge its growth. That’s why we decided we didn’t want to invest $US2 million, we wanted them to have enough to… be the winner in the domestic market.”
Article sourced from: The Australian-“AI credit risk start-up banks $15m after ‘near death’ ”.