By Péralte C. Paul
Verifacto, a Norcross-based financial technology startup, has joined the Advanced Technology Development Center’s (ATDC) Select program.
The company works with auto lenders, borrowers, and insurers and enables its clients to mitigate their risk exposure by providing a macro- and micro-view of their portfolios. That insight, Verifacto said, improves the way lenders and insurers engage with their customers.
Led by co-founders Hezi Moore, the company’s chief executive, and Baruch Pappo, its president, Verifacto’s technology boosts its clients’ operational efficiencies and cuts costs.
The company’s cloud-based risk management system, which utilizes advanced communications technologies, automation, and algorithms, provides auto lenders with real-time visibility into their portfolios’ risk status and enables them to take quick action. The platform also helps consumers be compliant with their loans.
“Verifacto is a technology company focused on improving the ways auto lenders and borrowers connect with information, by organizing the information we obtain from lenders, borrowers, and insurers and making it accessible and useful to our clients and their customers,” Moore said.
A graduate of the Georgia Institute of Technology, Moore holds a Bachelor of Science in Computer Engineering and a Master of Business Administration in Management of Technology. He was most recently chief technology officer of Huawei Technologies’ cloud computing business. Verifacto is his third startup.
He said Verifacto’s business model addresses the two risks lenders and insurers have with the high-risk, or “subprime,” market — borrowers who have had trouble meeting past loan obligations. The first risk is those customers consistently making their loan payments and not falling into delinquency. The second is maintaining insurance.
“What we do is address the risk management in lending,” Moore said. “There are two high risk areas that we help our clients to focus on and manage — first, that their customer will pay their loan on time and do so in a way that is easier and convenient for them, and second, that the collateral on the loan is properly insured.”
The company supports its clients, with sizable portfolios that include thousands of vehicles, in four key ways. It uses its technology to study borrowers’ payment patterns, habits, preferences, and invoice status. That allows Verifacto’s clients to then send tailored, automated bill payment reminders designed to increase the likelihood of payment. The system also enables its clients to accept payments directly from those customers as well as monitor borrowers’ insurance coverage to alert its clients when their risk escalates due to an insurance issue.
“We utilize the latest technologies to obtain, parse, and update the relevant data from the insurers on one side and combine it with loan payments data, and enable automated communication with the lender, and the lender with their customers on the other side,” Moore said. “What we do and how we do it not only helps with the customer making their payments and doing it in a timely way, but it also reduces the number of calls our clients have to make.”
Verifacto seeks to expand just as the subprime auto market has revved up. In 2014, subprime borrowers took out more than $98.3 billion in auto loans, according to Atlanta-based Equifax, the credit-reporting giant. That’s a 7 percent jump from 2013, Equifax reports. But it’s a 43 percent spike from 2008, when the U.S. economy was in the throes of the Great Recession sparked by the housing and financial crisis.
Moore sees that market as a great opportunity for his company’s growth because lenders and insurers want to utilize all available tools to improve the bottom line and cash flow, while reducing overhead and risk.
Part of the company’s growth strategy is ATDC. One of the nation’s leading technology incubators and a unit of Georgia Tech’s Enterprise Innovation Institute, ATDC is a statewide technology startup incubator that helps entrepreneurs build and launch successful companies.
Earlier this year, ATDC launched a FinTech accelerator — using a $1 million gift from Worldpay to fund it. The goal is to identify and strengthen FinTech startups in Georgia, which have proven to be a growing segment in the state.
Startups accepted into the Select program receive one-on-one mentoring from Entrepreneurs-in-Residence (EIRs), experienced business owners who guide these companies through critical growth stages. Select companies also get access to other ATDC and Georgia Tech business development programs. Moore himself is a former EIR.
“We chose Verifacto because they have strong market traction as proven by their exceptional revenue growth in the last year,” said Tim Sheehan, ATDC’s lead EIR. “They’re a great company and are exactly what we are looking for with our FinTech initiative. They have a strong team and have integrated with significant partners, including major insurance companies.”