Setpoint Raises $31 Million to Shore Up Credit Infrastructure

Credit infrastructure provider Setpoint has raised $31 million in a Series B round.

The funding round, led by 645 Ventures, will help fuel research and development, with an emphasis on expanding Setpoint’s engineering and data science teams, the company said in a Wednesday (Aug. 14) news release.

Setpoint said it wants to use machine learning and large language models to enhance the verification of asset data and calculations, promoting greater innovation in the credit infrastructure space.

“Many of life’s most important transactions — whether purchasing a home, obtaining a small business loan, or refinancing a credit card — depend on a complex network of trust and credit relationships,” the release said. “Leading investment banks and credit funds manage trillions of dollars daily through warehouse facilities, securitization issuances and whole loan purchases. However, managing these transactions often relies on outdated methods like email, Excel and FTP folders, leading to errors and inefficiencies that impede growth and drive up the costs of lending and borrowing.”

Setpoint said it aims to change this, with software that digitizes, organizes and verifies data, creating a “real-time asset source of truth,” and helping borrowers and lenders navigate various complex financial arrangements.

The company’s use of an artificial intelligence (AI)-powered language model in the credit infrastructure space is happening as U.S. regulators are calling on greater oversight for the technology’s use in the financial services sector, as PYMNTS wrote earlier this week.

In a recent letter to Treasury Secretary Janet Yellen, the Consumer Financial Protection Bureau (CFPB) outlined its approach to regulating AI and other emerging technologies in the financial world. The agency stressed that innovation must not come at the expense of consumer protection or fair competition.

“Although institutions sometimes behave as if there are exceptions to the federal consumer financial protection laws for new technologies, that is not the case,” the CFPB said in its letter. “Regulators have a legal mandate to ensure that existing rules are enforced with respect to all technologies, including those marketed as new or novel.”

As noted here, this position comes as AI and machine learning are used for everything from customer service to fraud detection to credit underwriting.

“While these technologies promise increased efficiency and potentially better outcomes for consumers, they also raise concerns about fairness, transparency and compliance with existing regulations,” PYMNTS wrote.