Amount, a Chicago-based technology startup that online lender Avant spun off in February, has raised $81 million in Series C funding led by Goldman Sachs, bringing its 2020 funding to $140 millon. Existing investors August Capital, Invus Opportunities and Hanaco Ventures also participated in the latest round, the company said Wednesday.
Amount has also been racking up bank clients that use its technology to make personal loans and point-of-sale loans. BBVA, HSBC and TD Bank are among them.
Jade Mandel, a vice president in Goldman Sachs’s merchant banking division, said Goldman was drawn to in Amount specifically by the fraud detection technology built into its platform.
Avant's fraud detection models have been refined by $7 billion worth of loan originations, Mandel noted. "The company has solidified a clear data advantage" in finding signs of fraud "that resonates with its clients,” she said.
Banks' investment in and adoption of this technology reflects the industry's growing enthusiasm for point-of-sale lending.
“Point-of-sale lending has experienced tremendous growth alongside the boom in e-commerce and doesn’t appear to be slowing down,” Mandel said. “Part of our reason for investing is that we expect banks to play a larger role in this growing market over time.”
Adam Hughes, Amount's CEO, said his company’s technology strengths lie in the user interface, fraud prevention and self-service tools that were developed by Avant as it made loans to consumers over the course of seven years.
“We realized that there was a white-label opportunity to bring banks to 2020 consumer digital standards,” he said.
Amount’s technology can “effectively replace anything that banks do in the branches today for their consumers, as well as offering point-of-sale, buy now, pay later tools to compete against the Affirms and Klarnas of the world, and for banks to go out and win new merchant partnerships,” Hughes said.
For all its lending partners, Amount handles the loan application and origination process, but uses the bank’s credit policy, unless the bank asks for Amount's help with setting policies.
TD Bank uses Amount’s technology to automate personal loan origination on its website and app, in its branches, and over the phone. It also uses Amount’s point-of-sale lending on ecommerce sites. For instance, on the checkout page for TD Bank merchant customer NordicTrack, there are a few options for financing a treadmill that go through Amount's platform.
HSBC uses Amount’s software for personal loan origination on its website.
At BBVA USA, Amount’s technology is used for personal loan origination and to prevent fraud in personal loans, credit cards, deposit accounts and money market accounts.
Amount has developed a fraud score based on loan applications it’s analyzed over the years. It also integrates its fraud prevention analysis with 30 specialized risk data and technology partners.
Some focus on first-party fraud, in which a real customer applies for a loan with no intention of repaying. Others concentrate on third-party fraud; for instance, someone applying for a loan with a stolen identity. Another set of partners specialize in synthetic fraud, where fraudsters create a fake identity out of pieces of real identity data from different sources. And some provide income and employment verification.
Hughes would not specify which companies Amount works with, but said that with more people making purchases via mobile devices "digital fraud risk is certainly going up."
“There's a lot of bad actors out there that are trying to take advantage of digital usage and adoption rates skyrocketing," he said.
