Today, we’re announcing that Notion has co-led a $5.0m Series A investment in DemystData with Singtel’s Innov8. Demyst is co-located between Hong Kong and New York and marks Notion’s first foray into the Asian markets as an Investor. And testament to Demyst’s global potential, the international syndicate has investors from the UK, Singapore, Hong Kong and New York including Arbor Ventures, P2P Equity Partners, Accion International and Wonga Founder Errol Damelin.
30-40% of credit applications declined could have been accepted
Demyst enables banks and other lenders to assess the credit risk of borrowers using unstructured data, typically from online, internal and social sources, in order to make better lending decisions. Demyst does not lend money but instead uses proprietary statistical techniques that outperform the more typical logistic regression approach when working with emerging messy data sources. Demyst’s API is painless for clients to integrate and allows a credit provider to develop configurable credit scoring that is specific to that provider.
Demyst analysis over the past two years has shown that between 30 and 40% of credit applications by consumers and small businesses that were declined could have been accepted using Demyst’s configurable API, without any increase in the default rate of those loans. On top of Demyst’s ability to increase the acceptance rate of loans, Demyst is also able to deliver a credit score in less than a second and build a file for the applicant instantly to automate more of the risk assessment processing. This compares to a traditional lender that can typically take 1-3 weeks to approve an SMB or Consumer loan and incurs significant administrative costs at the backend.
Great team, scalable business model
What we love about Demyst’s business is that it has an outstanding team, it is using the scalability of big data analysis in the Cloud, with some very clever statistical tools and it can continually improve the quality of its offering by seamlessly integrating new datasets, whether structured or un-structured.
Allowing each lender to influence the credit scoring outcome in their own way makes Demyst hugely appealing across multiple lenders in segments including credit cards, personal loans, motor finance, insurance, P2P lending, SMB loans etc. Demyst will be directly disrupting the international Bureau market, taking on multi-billion dollar revenue incumbents like Equifax and Experian.
It probably doesn’t need highlighting, but Demyst operates in an enormous multi-trillion dollar global consumer and SMB credit market growing at 11% CAGR in Asia and 5% CAGR in the US and its product offering has applicability both in developed and emerging markets. Developed markets are seeking real-time risk solutions to increase the number of credit application approvals, while in emerging markets there is an opportunity to bring online consumers and SMBs that have never been able to borrow money before due to the lack of information available to lenders. Demyst estimates that the market opportunity for incremental credit growth that it is chasing could be as much as $500bn globally.
I think Mark Hookey, Founder and CEO of Demyst, explains well why we at Notion think the Demyst opportunity is so compelling, “Big Data is booming; but data access, integration, cleansing and interpretation is a real pain point for most financial institutions. That’s all we do. Demyst software delivers enhanced consumer and small business risk information to augment existing systems and help clients say ‘Yes’ more often.”
We are really excited about working together with Demyst to support them as they take advantage of the enormous opportunity in front of them.