Douglas Merrill and Shawn Budde of ZestCash: Research Interview

Over breakfast at Norma's in Le Parker Meridien in Manhattan, I had a fascinating conversation with Douglas Merrill and Shawn Budde, co-founders of ZestCash.

Zest Cash aims to fill a gaping hole in the financial services industry for the millions of people who need occasional loans to overcome life's mishaps. Douglas explains the mission of the company while expressing compassion for customers that seems all to rare in the financial services industry: bad credit doesn't make you a bad person.

It turns out that credit underwriting for people who are living on the financial edge is a problem that is highly susceptible to an approach using big data. Shawn explains that most underwriting of consumer credit is based on one statistical model that uses about 15 variables. ZestCash uses dozens of models and thousands of variables.

Douglas's background as a VP of Engineering at Google and Shawn's background at CapitalOne, make them the perfect pair to attack this problem. ZestCash takes lessons from both organizations and combines them in a fascinating way that I'll be writing about in my Forbes.com column in the near future.