FinTech News

Intuit Announces Acquisition of Credit Karma

Another day, another major acquisition. More than a decade after they bought the personal finance app Mint for $170 million, Intuit is making a much larger platform purchase. As first reported by The Wall Street Journal and later confirmed by the company itself, Intuit is set to acquire Credit Karma for a whopping $7.1 billion. Credit Karma will reportedly continue to operate as its own brand within Intuit, with current CEO Kenneth Lin still leading the team.

Founded in 2007, Credit Karma is a free tool that allows consumers to view and monitor their credit scores from Equifax and TransUnion using the VantageScore model. Outside of that core function, the company has continued to introduce new features in the realm of finance, including the ability for users to locate unclaimed property in their names, as well as identify when their information was found in a data breach. Meanwhile the company monetizes its platform by recommending credit cards, loans, and other financial services to users.

As for Intuit, they’re perhaps best known for their QuickBooks and TurboTax products — although the aforementioned Mint has gained popularity as well. For them, the addition of Credit Karma would continue a trend of expanding their reach beyond “professionals.” Anecdotally, this is something seen in their latest TurboTax ad campaign that declares “All People are Tax People.” According to WSJ, the company currently has an approximate market value of $77 billion.

Among the many questions that a combined Intuit/Credit Karma raises is what will become of Credit Karma Tax. Initially launched in 2017, the completely free offering has expanded in recent years and enhanced its support. While Intuit’s dominant TurboTax also offers a free version, the number of tax situations supported at the price level is far more limited than what Credit Karma Tax offers. Thus one has to wonder whether Intuit would kill off the competition or perhaps improve the product and allow it to bring a new base of users into the Intuit ecosystem.

As alluded to, this purchase would be the latest in a string of notable acquisitions announced in recent weeks. First, last month, Visa announced it was buying the incredibly popular FinTech tool Plaid for $5.3 billion. Speaking of FinTech, marketplace lender LendingClub also recently announced its $185 million purchase of Radius Bank. Finally, just last week, Morgan Stanley revealed that it was acquiring E*Trade at a price tag of $13 billion.

In a press release announcing the purchase, Intuit CEO Sasan Goodarzi said, “Our mission is to power prosperity around the world with a bold goal of doubling the household savings rate for customers on our platform. We wake up every day trying to help consumers make ends meet. By joining forces with Credit Karma, we can create a personalized financial assistant that will help consumers find the right financial products, put more money in their pockets and provide insights and advice, enabling them to buy the home they’ve always dreamed about, pay for education and take the vacation they’ve always wanted.” Meanwhile Credit Karma’s CEO Kenneth Lin recalled of his company’s initial goals, “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. We saw the opportunity to enrich people’s financial lives through transparency, simplicity and certainty.”

Assuming that the deal between Intuit and Credit Karma manages to close (which it is expected to do in the second half of this year), the acquisition would be notable for several reasons. At the top of the list is the eye-popping $7.1 billion valuation. Beyond that, it would cement Intuit as a leader in consumer-friendly personal finance tools. At the same time, with some long-time users complaining about what’s become of Mint under the company’s control, it will be telling to see if similar concerns arise regarding Credit Karma. In any case, it certainly seems that there’s something in the air that’s bringing more and more companies together.