Zest Expands Its Roster of Risk Products

ZestFinance Inc. continues to expand its product suite as institutions across the country look for more accurate risk forecasters in a turbulent economy.

The company unveiled Zest Portfolio Management on Sept. 12. It’s a tool the company said is able to analyze millions of customers’ credit data and issue quarterly reports, giving credit unions greater visibility on the health of their loan portfolios.

This is the third product Zest has introduced this year; the company is expecting to scale as consumer delinquencies on loans increase and banks face intensified scrutiny for loss capacity amid market downturns. Over the summer the fintech company announced a partnership with a loan origination system and multiple new underwriting models.

The Federal Reserve Board’s consumer loan delinquency rate has jumped for seven straight quarters since 2021 and now sits at 2.36%. While this is nowhere near the levels seen during the 2008 recession, when the nationwide delinquency rate jumped to as high as 8.94%, the uptick has pushed lenders already strapped under high interest rates to invest in newer tech.

“One thing we’ve been hearing a lot from our customers is, given the macroeconomic uncertainty, what can they do to stay on top of loans that they already provided,” said Adam Kleinman, head of engagement management at Zest. “That’s really why we came out with portfolio management.”

Zest A.I., known for developing a new underwriting criterion to challenge inequities in the current Fair Isaac Corp. credit scoring model, will incorporate its existing models to offer what Kleinman calls credit migration tracking.

Credit unions look at a static snapshot of a customer when considering a loan­ – often this will be an application from several years ago, since manually reviewing years of credit performance can be taxing. Zest says its product will be able to adjust lending strategy with automated quarterly reports covering a financial institution’s entire customer base. With a machine-learning tool it claims can consider all publicly available credit information on a customer, Zest says credit unions can better gauge whether or not a customer has developed a healthy credit profile.

“Just looking at your average credit score on your portfolio at that time of underwriting and using that to manage risk, you’re going to miss a lot of activity that happened between the time they got underwritten and today,” Kleinman said.

Zest has partnered with approximately 150 financial institutions, all of which now have access to the new product. While Kleinman doesn’t expect Zest’s partners to increase loan portfolios this year, the company chose to debut this product now so clients are familiarized with automation when loan growth kicks in again.

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