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Identity decision platform Alloy announced today that it received $ 100 million in funding to boost its valuation to unicorn status, $ 1.35 billion. Lightspeed Venture Partners’ Justin Overdorff led the round with participation from existing investors Canapi Ventures, Bessemer Venture Partners, Avid Ventures and Felicis Ventures, bringing the total amount raised to more than $ 150 million.
The identity decision platform
Alloy plans to use the new capital to expand its offerings, helping fintechs and banks to securely onboard and make subsequent identity-related decisions about them.
Making decisions about loan or account applicants can be difficult simply because of the large number of data points that financial institutions must consider. The alloy simplifies the process. It provides customers with a single API that can connect to multiple (120) data sources related to decision making: address and bank authentication, credit data, email and phone, fraud records are just a few. Customers can use these sources as data points to create custom workflows in a low-code, no-code form. “We automate the process of determining which data sources and which rules you apply work best for your use case, your population, and your tolerance for risk,” said Laura Spiekerman, Alloy Co-Founder and Chief Revenue Officer.
Due to Alloy’s extensive experience with the ways in which financial fraud manifests, it can also advise clients on customizing workflows based on their tolerance for ongoing risk.
Decreased bias in decision making
Financial services may be ready for bias, but Alloy, which is not an AI-powered platform, is working to level the playing field for applications by expanding the number of data points for application evaluation, Spiekerman said.
Most of the traditional decision-making carried out in banks is linear and not holistic, Spiekerman noted. This straitjacket approach automatically kills legitimate apps. For example, insisting that applicants have a credit profile with one of the three US credit bureaus (Experian, Equifax, or TransUnion) before a loan can be made to them. Such a process can be limiting for new immigrants, who may not have an established credit history in the United States. “Instead, we can look at the cash flow data, the transaction history, which opens the doors to a larger population,” Spiekerman said. Similarly, public database records are skewed toward a richer, more established demographic, so alternative data, such as utility bill records, can better level the playing field, Spiekerman said. “We believe that, at the fundamental level, bringing in more data can really help remove bias,” he added.
A continuous customer profile
While Alloy began by automating identity compliance and fraud during the initial onboarding process, it has since moved on to helping clients with ongoing decision-making processes, Spiekerman said. Decision-making in financial institutions is not limited to incorporation at an early stage. “There are tons of decisions that need to be made after onboarding – if we allow a customer to send $ 5,000 through an online transaction, change an email address, etc., which requires additional information,” Spiekerman said.
That’s why Alloy creates an evolving customer profile that goes beyond onboarding controls. “You need the original information about the user and you need their transaction history, what they have learned along the way, and the data from the network,” Spiekerman said. Alloy is a platform that “allows you to see all the behaviors, all the identity information that you can collect about your users, which is enriched over time,” Spiekerman said. This holistic information, a combination of static and transactional data, leads to better decisions and results for applicants.
Alloy’s biggest competition is the decision to build in-house versus buy. Showing value by helping companies get to market faster pays off to the company’s advantage. Alloy has large and small fintechs and banks on its list, including Ally Bank, Gemini, and Ramp. In the past year, the company more than tripled Annual Recurring Revenue (ARR) and increased headcount by 140%. Alloy currently serves more than 200 customers.
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