Intuit, the maker of TurboTax, QuickBooks and Mint, has agreed to acquire Credit Karma, the consumer technology platform, for approximately $7.1 billion in cash and stock.
The combination brings together two technology leaders focused on personal and small business owner financial challenges that include paying taxes, managing debt, maximizing savings, business accounting, accessing better credit cards and loans – and even recommending car and home insurance, a market Credit Karma entered in 2018.
“Our mission is to power prosperity around the world with a bold goal of doubling the household savings rate for customers on our platform,” said Sasan Goodarzi, CEO of Intuit. “We wake up every day trying to help consumers make ends meet.”
Credit Karma serves consumers by matching them with financial services providers. The platform leverages artificial intelligence and connections to more than 100 financial partners. Its services are free to members; it gets paid by the lenders and other product providers it supplies with leads.
From Insurance Journal’s report on the 2018 Insuretech Connect Conference, remarks by Credit Karma founder Kenneth Lin:Kenneth Lin, founder of 85-million-member Credit Karma, gives technology credit but only up to a point. “We can do things faster, and we can pay with more payment methods, we can take applications online. We’ve made streamlining and underwriting easier. We’ve done a lot of amazing things in capturing data.”All of that is great but it leaves the real financial issues facing consumers unsolved. “We are failing a lot of consumers,” Lin says. For example, 28% of consumers have no money left at the end of the month; they need to borrow. Less than 46% of consumers have less than $500 in savings, and even includes people with incomes of a $100,000 or more. Credit Karma teaches that shopping around for financial products really matters and, Lin hopes, building products to help them do that really matters, too. He challenged everyone to think about building products that solve little consumer problems.Credit Karma started out giving free credit reports on its way to becoming a trusted source for shopping for credit cards, loans, a tax service and now, advice on car insurance. “All of these things are not about building revenue but about building trust and building engagement with our overall user base.” It’s also about education. Lin says as members learn how their credit scores work they tend to become better consumers and financial risks.Recently Credit Karma started helping its members track the value of their cars — which for many is their most important asset — and also learn about safety recalls on their makes and models. So over time Credit Karma has collected its members’ demographics, address, credit score, tax information and car information and even traffic violation along with other any public records. Eight million members have synced their cars to Credit Karma’s platform since launch of its auto feature a year ago.The next logical step is to help them find the best rates on car insurance without them having to input any additional information. And teach them how their credit score and other factors affect what they pay for insurance. The insurance shopping service has been launched first in California and Texas. Consumers can get anywhere from 10 to 30 quotes with little or no data entry. Lin’s firm is not partnering with any insurers or being paid for this service, at least not yet. “Through all the journey, we think about being a champion for our members,” said Lin. This is how Credit Karma explains its business model to its members:
“Credit Karma will always be free. The offers on our site help us keep it that way. When you take an offer through Credit Karma (like for a credit card or a loan), we usually make some money from one of our partners (like the bank that issues the card or the lender who funds your loan). We’ll even crunch the numbers and give you personalized recommendations. When those tips are on target, we both win. But if you’re not interested, that’s totally fine too – you’ll never get charged for using Credit Karma.”
Credit Karma reports having more than 100 million members in the U.S., Canada and U.K. and nearly $1 billion in revenue in 2019, up 20% from the previous year. It is based in San Francisco and has 1,300 employees.
“We started Credit Karma with a goal to build a trusted destination for all consumers, to make financial progress regardless of where they are in life,” said Kenneth Lin, founder and CEO of Credit Karma. “We saw the opportunity to enrich people’s financial lives through transparency, simplicity and certainty.”
Lin will report directly to Goodarzi. Credit Karma will remain in San Francisco and continue under its current name.
