The AI Employee for Banks
Kastle founders Rishi and Nitish discuss their journey building AI employees for banks, from a difficult pivot before YC Demo Day to processing billions in transactions. They share insights into finding product-market fit in a highly regulated industry, ensuring AI reliability and compliance despite non-deterministic LLMs, and their vision for automating financial operations.
Kastle, an “AI employee” company, automates operations within banks, initially focusing on mortgage servicing and expanding into consumer lending. The company has successfully processed over $2 billion in transactions using AI agents and works with 10 of the top 25 mortgage servicers.
The Need for AI Employees in Banking
Banks face a challenge where revenue growth necessitates an expansion of their back-office operations. However, large, regulated financial institutions are highly resistant to change, making it difficult to replace core systems—a process that can take 5-10 years. Kastle recognized an opportunity to help banks reliably adopt AI and deliver value quickly without requiring a “rip and replace” of existing infrastructure. They aimed to provide a solution akin to development tools like Devin, which supercharge workflows, but tailored for banking operations, acknowledging the absence of a suitable solution beyond complete system overhauls or fragmented point solutions.
The YC Journey: Pivoting from Failed Ideas
Kastle’s path was not linear. During their YC batch (Summer ‘24), they initially pursued an idea for AI-powered real estate assistants to help agents close deals. After proving this pilot unsuccessful within a week, they pivoted to an AI SDR model for home buying, gaining $4,000 in MRR. However, just one month before Demo Day, the founders decided to abandon this idea, realizing it wasn’t “existential” for their customers and couldn’t scale into a large, long-term company. This led them to “go back to zero” a second time, driven by a desire to build something customers “couldn’t live without.”
Discovering Product-Market Fit in Mortgage Servicing
In a frantic sprint involving extensive user interviews and attending numerous conferences, the founders discovered a critical inefficiency: 10 million Americans call to make mortgage payments over the phone every month. These calls were handled by human agents in the U.S. due to the highly regulated and risky nature of mortgage operations. This insight revealed a significant, underserved problem, as existing Voice AI solutions weren’t equipped for processing payments in such a regulated environment.
Landing the First Customer Against the Clock
With only two weeks until Demo Day, Kastle participated in a pitch competition in San Diego. Despite a humorous on-stage demo malfunction (two failed attempts to process a payment live), they won the competition, generating significant inbound interest. This led to securing their first customer, Newrez (the third-largest servicer), just days before Demo Day. To ensure a successful launch, the Kastle team relocated to Phoenix and worked from Newrez’s offices until their solution went live.
Kastle’s Vision and Technical Innovation
Kastle’s success in mortgage servicing has proven that “applied AI autonomous agents can work in one of the most regulated operational environments.” They are now expanding this operating model and underlying technology across the broader consumer lending lifecycle, servicing auto loans, credit cards, personal loans, HELOCs, and even loan origination. Their long-term vision is for Kastle to be the leading AI employee, working alongside human agents across all financial institutions, automating high-volume, labor-intensive tasks and freeing humans for complex workflows requiring judgment.
A key technical achievement for Kastle is enabling customers to prompt AI agents while ensuring deterministic and compliant behavior in a highly regulated industry, despite the inherent non-deterministic nature of underlying Large Language Models (LLMs). This “hardness” in their system allows for reliable and secure operation. As they scale, Kastle is actively hiring across applied AI, product, and infrastructure teams to support their growth and expansion into new banking sectors.