How AI Agents Are Transforming Loan Servicing in Private Credit

0:00Hey, I'd like to welcome you to another episode of Mission Matters. My name is Adam Torres, and if you'd like to apply to be a guest in the show, just head on over to missionmatters.com and click on be our guest to apply. All right, so today I have Aitan Freelich on the line, and he's CPO over at Hypercore, and this episode is part of our Venture Deck Conference series, where we bring you the best of those who are attending the Venture Deck Conference that'll be happening in New York City. That conference is going to be happening on April 16th, and if you want to grab tickets, anything else like that, you can just go to dealflowevents.com. Aitan, welcome to the show. Hi, hi, nice to meet you. All right, so we got a lot of talk about here today, so I of course want to get into the work that you're doing over at Hypercore specifically around AI agents and in your niche

1:00and loan processing, but before we get into that, we'll start this episode, the way that we start them all, with what we like to call our Mission Matters Minute. So Aitan, at Mission Matters, our aim in our goal is to amplify stories for entrepreneurs for executives for experts. That's all we do. Aitan, what mission matters to you? So I am very surprised to get this question. Of course, joking, and so at Hypercore, our mission is to develop an AI admin agent, especially designed for private credit funds. Love it, and let's go in a little bit further into that. How'd you get into this? Talked me a little bit more about Hypercore, like where that began. So I will try to get like a bit quick with that one when talking to you in the full story, but actually it's a good story. I actually had a dev shop with my co-founder, we developed all kinds of apps, and like in my background, I'm an engineer, and one of the projects we did, we actually specialized

2:02in FinTech project, and one of the projects we did was actually a wallet app for a guy who wanted to establish a bank for foreign workers, and eventually when we started the development, we started to see, okay, he said, this guy said, okay, I want to also to provide loans, so he said, okay, let's take a product of the shelf, but that will manage all the loans, and we start to searching, and he didn't find something, he didn't find anything that is good, and eventually start to search and search, and to ask him also funds, like, okay, Lenders, how do you manage your business, and we discovered all these like manually, and then we got the idea of, okay, maybe we can improve the life of those kind of Lenders, and automation with a platform, and we started to do that, onboard some clients, got accepted to Yconvenator, are you familiar with them, so then we understood, okay, we have something here, basically we stopped the dev shop company and said, okay, we're going to focus on Hypocore only, and then it's all started, and we are start up, so we did

3:07a fundraise, and basically another fundraise, and then we sent review. Wow, so AI agents for loan servicing, go a little bit further into how that works, because I'm interested, because I'll tell you right now, Yton, I've been having these conversations about AI agents, and I have FOMO, I'm talking to somebody yesterday, and I'm like, I need an AI agent for something, and I'm telling my colleague, and my colleague's like, well, what would you want to do, and I'm like, I don't know, I just want one, I feel like everybody has them, they're building them, all these things are happening, so how did you see like that opportunity there, that maybe some other people aren't seeing, because I'm so curious, and I'm also picking your brain, because I need to see the opportunity in my industry, I don't deal with loans, but I feel like I'm missing something, how did you see that opportunity? So I think basically it's a good question, and I will talk from like my perspective for my industry, and I think mostly for lending, most of AI focus on ready decisioning and

4:11underwriting, but I think there is like the focus of handling post closure operations, is something that is neglected, and this is what hypercore is focusing on, think about it like at the moment, for a lender after he will close the deal, have the contract done, and he need to operate that deal, he need to create a demotization to enforce and structure the deal, eventually to get the payments to reconcile them, reporting for the blowers, reporting for the investor, a lot of administrative work, what most of the lenders do, they will outsource it, think about it, AI, instead of outsource it to the humans, outsource it to an AI legend, that, stand that outsourcing part for a moment, I just want to be clear about that, so what would that look like, that's a human, currently, that might be an underwriter and additional, other processes, but these are repeatable processes, I want to go a little

5:13bit more into what you're saving here in terms of time and also dollars, so think about it, I think it's very adversity, at the moment most lenders will probably outsource to some kind of a servicer, and what the servicer will do, first of all you need to take the long contract, I'll say, and convert it to actual amortization schedule, and provide the proof of, okay, it's a very complicated deal, maybe 200 pages PDF, now we're trying to understand, okay, what I need to do with it, okay, how much is actually needs to pay, and it becomes very complicated, on top of that take syndicated deals, and you have many investors, and each of them will have different terms and becomes complicated, usually takes many work, from my clients, what I hear about two weeks, two weeks until the servicer will provide them, just, okay, how it looks like, what are the terms, okay, high-processed, currently in hypercore, our agent basically process and extract the information, and what it does

6:15we use like our own internal engine that calculates all the loan and relevant entities, it takes us five minutes, instead of two weeks, it takes us five minutes, like when we do demos to be clients, their jar, it just remains up, and really, it's crazy, anyway, I know as far of today, think about, there's this term of shadow booking, are you familiar with it? No, I don't know shadow booking, so it's very common that like even though you will outsource your entire administration, like the entire operation of your loan, because you want to focus on getting more powers, or to get more money from investors, we notice that like our clients that mostly use some of the new hypercore just as the platform to manage their own, still use the servicer, like we'll outsource their operations, and then I'll try to just say, okay, what's happening here, why you are still using hypercore and create the same deals on our platform at the moment, but on the other side you will outsource it to somebody else,

7:17and they say, oh, we are doing shadow booking, what does it mean? Basically, we shadow the same numbers as our servicer, why we want to make sure he's doing a good enough job, like the numbers, aligned, reconciled, and yeah, sometimes find errors, and I'm like, what, like when I heard that, like I was like, my mind was exposed, like, what, yeah, it's like the same for me, like, I will think about it, like you will hire an accountant, and basically you will do the accountant job, because there is a lack of trust here, like wow, it's like crazy, and this is actually how this business looks like, and I think like as far as trust and speed and visibility for your data, and what's really happening with your portfolio, using our platform on top of that, having the AI agent, which basically what has been AI agent, like all the operations that is done by the human on top of the platform, can be done by an agent, there are some fields that

8:21like AI can do way better than us than humans, what? And for example, take a file and process and extract relevant terms, so take a huge amount of data and then to summarize it, works great. With that said, yeah, here's like my perspective, I think like the decision eventually, like I won't trust AI to decide if this borrower is like quality to get my money or not. Eventually, I think this is like the secret sauce for each lender, but for the servicing, like when you say, okay, I need to write to process this long file and to create a deal, okay, definitely I can help. So the conciliation of numbers, like automatically to connect to the bank account, to get the numbers to align them with our calculation, this all can be done, automatically, of course, there should be a human in the loop to verify and review everything, and but still, I think like 80% of its time can be like used for better stuff than like

9:26reviewing this kind of number and doing those manual operations all over and over again. Yeah, and Aitan, that's a large number. So when you say like 80% maybe can be done, and that leads me to think about like, and because you come from FinTech in general, even outside of HyperCore, you were working at FinTech, and what is in FinTech right now? What's real today versus just hype, and people kind of trying to ride that AI wave, like what are you saying? One thing I saw, I felt a lot of people trying to say, a lot of companies trying to say, okay, we need to use AI or somebody somehow to say like we use AI, eventually when you ask them, okay, what do you say I and for their meetings to do the summary and stuff like that, like very poorly, they actually use AI, don't use it like in their core business, they don't change actually the way they operate. Why? Because it's still a thing, you have your day-to-day job, and you used to do it, and if you won't do it, somebody needs to do that. So basically you need

10:27to step out and see, okay, how you can reinvent a bit yourself, and this is what we try to achieve with our company also, and with our product offering. Like a new way to do. Speaking of HyperCore, I think you said this in the beginning, but are you currently raising money or were you at with the company, like what stage are we at? So at the moment, no, actually we just finished our fundraise. Congrats, that's a big step, congrats, that's awesome. Thank you, thank you very much. Yeah, and we have some great partners inside, so we're very happy to get them. But yeah, actually, like if any of our current product offering sounds interesting, and now we're service of AI, I've been agent serviceers, sounds interesting, I think, yeah, I think this is basically what we're looking for now, and not once, more about like interesting partners that we can work with. That's awesome. A ton, this has been a lot of fun

11:29having you on the show today, and getting to know more about HyperCore. I know that you'll be at the Venture Deck Conference, April 16th in New York City, for everybody to listen if you want to meet a ton in person, talk more about HyperCore, but if somebody's not going in person, and if they want to follow up and connect with you and your team, what's the best way for them to do that? First of all, I have a link thing, but I think the best would be just to go to our website, hypercore.ai, and you get all the information there. Fantastic, for everybody listening, just so you know, we'll definitely put some links in the show notes, and you can just click on the link head right on over and connect, and speaking of the audience, if this is your first time with mission matters, and you haven't done it yet, hit that subscribe or follow button. This is a daily show. Yes, you heard me correct. Daily each and every day we're bringing you new content, new ideas, and hopefully new inspiration to help you long-dew in your journey as well. So, hit that subscribe or follow button, and a ton, man, it's been a pleasure having you on, wishing you and your partners much more success with continued success with HyperCore. Thanks for

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