The leading U.S. direct bank and credit card issuer Discover Financial Services (DFS) earlier this month has partnered with ZestFinance, a leader in Artificial Intelligence software for underwriting, to develop one of the largest AI-based credit scoring solutions in the financial services industry. With this collaboration, DFS will be utilizing the Zest Automated Machine Learning (ZAML) platform to enhance credit underwriting by taking benefit of interpretable Machine Learning approaches to make more precise lending decisions.
Both firms, in a successful trial, found that the inclusion of more data and AI methods reduced default rates significantly without added portfolio risk. ZestFinance Founder and CEO Douglas Merrill said that a lot of banks struggle just to get their AI out of the lab. Discover is a leader in the financial services industry with the vision to make machine learning core to their business. Using machine learning responsibly means deploying accurate, explainable and fair models, he added. In this regard, Discover Financial Services CEO and President Roger Hochschild stated that banks that fail to invest in machine learning will end up fundamentally uncompetitive in a couple of years. Hochschild further added that we found the best way to drive benefits faster was to complement our internal efforts with a partnership with Zest.
According to the reports, the companies expect to put their first Machine Learning model into production later this year. As part of the announcement, Merrill and Hochschild are scheduled to come together April 8 at the LendIt Fintech USA conference in San Francisco, to discuss key business advantages of matching the latest Machine Learning technology with the rich data held by financial institutions.