How to rate a company in a fair and unbiased way? Traditional ratings agencies are paid to produce good ratings – resulting in heavily biased ratings, fostering economic crises like in 2008. That is where the team of RealRate comes in, using the latest Artificial Intelligence technology to rate whole industries. We take a closer look to see how this firm has flourished over the last few years, successfully applied new technology and created new technology honoured by the German Business Award.
Artificial intelligence (AI) is being used around the world, playing a vital role in may sectors and industries. The potential of AI is obvious. It can work free of discrimination with regards to gender, age, or race. Further, the newest trend in AI is making it explainable. RealRate developed a new award-winning approach to explain the strengths and weaknesses of rated companies. Thus, removing the black box governing the usual AI approach. This is the foundation RealRate used to build a new business model and revolutionizing the ratings industry.
Under the leadership of Dr Holger Bartel, founder and CEO, the business has quickly gained a reputation for trustworthiness across multiple sectors. They solved problems related to traditional ratings: a slow, cumbersome, and expensive interactive approach. Totally in contrast, RealRate has no human analysts. They use their selfdeveloped AI software. And they built fairness into it, a requirement becoming vital, avoiding any sort of discrimination or conflict of interest. RealRate’s secret recipe is Explainable AI. Trusting new technologies like Artificial Intelligence relies on understanding its results. For the ratings market this means understanding why a company got a good rating – or a bad one.
Using self-developed software, the team can take the published balance sheet data of a company’s annual business report and generate an interpretation showing the real causes and effects of the company’s financial health. Understanding these graphical results can be achieved within just two minutes, instead of having to read 200 pages of the annual business report. Simplicity and elegance guide every step of the process.
The team works entirely independent, with whole industries being rated in one go. Companies with the best ratings are addressed directly and can choose to purchase a RealRate seal of approval using it for marketing purposes, building customer trust and strengthening their brand.
Since opening their doors in 2019, the firm has had an impressive amount of interest in their work. Now, with demand running high, the plans are to scale up over different countries and industries. While other rating agencies have thousands of employees, RealRate’s business model is highly scalable. With the fully automated systems in place, it is possible to generate hundreds of rating reports in an instance, while at the same time providing easy to grasp individual insights.
Having achieved such an impressive level of success in Germany to date, it comes as no surprise that the firm is already looking to expand into new territories. In 2021 the team will enter the US market. With many listed companies and highly standardised electronic annual business reports, it is the ideal ground to apply the technologies that have been perfected in Germany. The plan is to cover thousands of companies and dozens of industries.
RealRate offers independent and interpretable ratings. Its origin is in providing ratings to the financial industry, a highly regulated market. The AI analysis and additional explanations of the company’s financial strength are highly valuable for risk managers. They learn about the comparative advantage with respect to their peer group and the way they would need to change to overtake the market. All in all, this helps companies to further professionalise their risk management, strengthen their resilience, growing faster and building up trust with their customers. In short, RealRate’s ratings offer a new way for companies to increase financial strength and helping them growing faster. It is a cutting-edge business case for AI in finance, taking advantage of most recent technology to provide a solution that will last for the years to come.
Originally published EU BUSINESS NEWS