ZestFinance, founded by Google veteran Douglas Merrill in 2009, applies big data analysis and machine learning to credit scoring to help lenders more accurately evaluate prospective borrowers. Instead of determining credit worthiness based on 10 to 15 pieces of data like traditional banks, ZestFinance uses tens of thousands of data points to assess a borrower’s ability to repay loans.

Merrill explained that ZestFinance’s technology identifies good borrowers who may otherwise be classified as having subprime credit scores that make them ineligible for loans. But he claims that ZestFinance’s algorithms can accurately predict whether such a borrower would be able to repay the money, thus giving the company the ability to serve borrowers overlooked by traditional banks.

ZestFinance offers its loans through the online lending site, Basix. Its loans are available for a three-year term, and range from $3,000 to $5,000. But they come with much higher interest rates than from traditional banks. Borrowers must pay 26% to 36% interest, exceeding rates charged by credit cards. The average interest rate on a personal loan is around 12%, according to fellow online lender Lending Club (LC).

ZestFinance says that it has issued thousands of loans worth millions of dollars. The company is profitable and is doubling revenue annually, Merrill said. The company also just signed a big deal with Chinese e-commerce company JD.com to bring its credit scoring to loans in China.

The online lending space is quickly getting crowded. In the past six months, nearly 100 online lending startups have premiered, creating intense competition for borrowers.

The other question is whether U.S. regulators will eventually hold online lenders to the same standards they apply to consumer banks like Citibank and Wells Fargo. Former SEC chairman Arthur Levitt expects that regulators will start to look more closely at this emerging crop of startups.

Levitt’s predictions may come true and more regulation may be coming soon. After receiving an inquiry for more information from the U.S. Treasury Department, one of the largest online lenders, LendingClub, submitted a response explaining how online lenders operate and “how the financial regulatory framework should evolve to support the safe growth of this industry.”

Zest has raised a total of $65 million in equity funding and $175 million in debt, including the latest from Fortress Investment Group (FIG), which has $70 billion in assets under management.

For more on how online financial firms will impact consumers, watch this video: