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AI IN BANKING: Artificial intelligence could be a near $450 billion opportunity for banks — here are the strategies the winners are using

Mon, 02/24/2020 - 10:01pm

Discussions, articles, and reports about the AI opportunity across the financial services industry continue to proliferate amid considerable hype around the technology, and for good reason: The aggregate potential cost savings for banks from AI applications is estimated at $447 billion by 2023, with the front and middle office accounting for $416 billion of that total, per Autonomous Next research seen by Business Insider Intelligence.

Most banks (80%) are highly aware of the potential benefits presented by AI, per an OpenText survey of financial services professionals. In fact, many banks are planning to deploy solutions enabled by AI: 75% of respondents at banks with over $100 billion in assets say they're currently implementing AI strategies, compared with 46% at banks with less than $100 billion in assets, per a UBS Evidence Lab report seen by Business Insider Intelligence. Certain AI use cases have already gained prominence across banks' operations, with chatbots in the front office and anti-payments fraud in the middle office the most mature. 

In this report, Business Insider Intelligence identifies the most meaningful AI applications across banks' front and middle offices. We also discuss the winning AI strategies used by financial institutions so far, and provide recommendations for how banks can best approach an AI-enabled digital transformation.

The companies mentioned in this report are: Capital One, Citi, HSBC, JPMorgan Chase, Personetics, Quantexa, and U.S. Bank

Here are some of the key takeaways from the report:

  • Front- and middle-office AI applications offer the greatest cost savings opportunity across banks. 
  • Banks are leveraging AI on the front end to smooth customer identification and authentication, mimic live employees through chatbots and voice assistants, deepen customer relationships, and provide personalized insights and recommendations. 
  • AI is also being implemented by banks within middle-office functions to detect and prevent payments fraud and to improve processes for anti-money laundering (AML) and know-your-customer (KYC) regulatory checks. 
  • The winning strategies employed by banks that are undergoing an AI-enabled transformation reveal how to best capture the opportunity. These strategies highlight the need for a holistic AI strategy that extends across banks' business lines, usable data, partnerships with external partners, and qualified employees.

In full, the report:

  • Outlines the benefits of using AI in the banking industry.
  • Details the key use cases for transforming the front and middle office using the technology.
  • Highlights players that have successfully implemented AI solutions.
  • Examines winning strategies used by financial institutions that are leveraging AI to transform their entire organizations. 
  • Discusses how banks can best capture the AI opportunity, including considerations on internal culture, staffing, operations, and data.

Interested in getting the full report? Here are two ways to access it:

  1. Purchase & download the full report from our research store. >> Purchase & Download Now
  2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
  3. Current subscribers can log in and read the report here. >>Read the Report

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The CEO of Intuit explains how buying Credit Karma for $7 billion will help it put 'a financial assistant in the pockets of consumers' (INTU)

Mon, 02/24/2020 - 9:02pm

  • TurboTax maker Intuit announced plans to acquire credit monitoring company Credit Karma for $7.1 billion on Monday.
  • Intuit CEO Sasan Goodarzi and Credit Karma CEO Kenneth Lin tell Business Insider that the deal will accelerate the growth of both of their companies. 
  • Intuit has been working to use artificial intelligence to make its tools more personalized, and Goodarzi said acquiring Credit Karma helps them do that faster. 
  • For Credit Karma, Lin said he found that combining forces with Intuit would help grow the company faster than via an IPO.  
  • Intuit and Credit Karma do have some tools that overlap, which could put antitrust scrutiny on Intuit for acquiring a smaller rival, but Goodarzi said he doesn't see that as a concern, because the ultimate goal is to give customers more choice — whether its an Intuit product or a Credit Karma product.
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On Monday, Intuit — the company behind TurboTax, Mint, and QuickBooks — announced plans to acquire credit monitoring startup Credit Karma for $7.1 billion.

It's the biggest deal in Intuit's 37-year history and comes just one year after Sasan Goodarzi took the CEO reins at Intuit. And the acquisition is being announced at a time of heightened regulatory scrutiny over antitrust and privacy issues. 

But Goodarzi and Credit Karma CEO Kenneth Lin are betting the deal, which they expect to close in the second half of the year, will give more choices to customers and accelerate growth for both businesses.

In an interview with Business Insider on Monday, the two executives discussed the strategy behind the combination.

Intuit has been working to make itself into a platform that works like a digital personal financial assistant for users and it hopes to do that by incorporating artificial intelligence into its products in order to give users recommendations about their specific needs. Credit Karma will help make that a reality faster, Goodarzi told Business Insider.

"This really gives us the opportunity together to create a consumer finance platform that truly acts like a financial assistant in the pockets of consumers ... the capability that Ken and his team have created at Credit Karma really helps to accelerate our speed to market," he said.

Credit Karma was built around the idea of using customers' financial data to help direct them to the tools that would be most helpful to them. Goodarzi said that capability is key to Intuit's overall goal. In order to get there they need data about customers so they can build artificial intelligence that directs people to the tools they need, he said. 

While some are questioning if this means Intuit's M&A strategy will become more aggressive, Goodarzi said that's not necessarily the case. This has less to do with wanting to do more acquisitions, and more about making sure the company is working towards its goal, he said.

"We're not after mega deals. We're after really accelerating, solving our customer problems and time to market. And it just so happens that Credit Karma has created something that very few have and together we can accelerate the benefits for customers," Goodarzi said. 

The benefits for Credit Karma

For Credit Karma, said CEO Kenneth Lin, joining forces with Intuit is the best way to keep growing and to provide customers with a broader menu of services.

"When you look at the data assets that Intuit has, the capabilities around fraud, the culture and the alignment of mission that we had, it made so much more sense to work through that relationship than the fundraising mechanism that is the IPO market," Lin said. 

Once the deal closes, Credit Karma will remain a separate entity within Intuit and Lin will continue running the company on his own, while reporting directly to Goodarzi. 

Intuit and Credit Karma do have some overlap in capabilities, particularly in the tax-filing space. Credit Karma offers a free tax-filing service to compete with TurboTax and uses a similar model to the one that Goodarzi has envisioned for Intuit. Meanwhile, Intuit has its own Turbo, a free credit-score-checking service to compete with Credit Karma. 

Intuit doesn't plan to get rid of Credit Karma's competing offerings. Goodarzi said on a call with investors that it will give customers more choice, which will ultimately benefit the whole company. 

Potential challenges: data privacy and antitrust

Acquiring a smaller rival with a competing type of software could put the deal in the crosshairs of antitrust regulators, who have begun taking a much harder look at tech acquisitions from Google, Facebook, Apple and other large tech companies. 

Goodarzi stressed that Intuit will be very forthcoming with any information regulators ask for during the acquisition approval process and said he doesn't believe the deal raises any competitive problems. 

"In terms of antitrust, this is not an area where we see an issue, because this is about creating more choice for customers and actually creating more competition and having more and more financial institutions really competing for the customer's business," Goodarzi said.

Another potential area of concern is growing regulations around consumer data privacy which aim to make sure people have control over the data companies are collecting about them. California's new data privacy law went into effect this year and Europe's GDPR law has been in effect for a few years.

Intuit and Credit Karma want to use their combined forces to collect all the financial data they have on a customer and use it to help that person's experience when looking for financial service tools. Goodarzi and Lin said they don't see any issues complying with those regulations. Both of their companies believe that customer data should only be used to help the customer and if the customer agrees, they said.

"From a data privacy perspective, this is the customer's data and we're just looking to ensure that they benefit from it," Goodarzi said, adding that he thinks Credit Karma takes it just as seriously. 

Lin said, he thinks Credit Karma is ahead of the legislation because they had those principles in mind when they created the company. "In many ways we're ahead," he said.

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BANKING AND PAYMENTS FOR GEN Z: These digital natives are the next big opportunity — here are the winning strategies

Mon, 02/24/2020 - 8:03pm

Generation Z, defined as customers born between 1996 and 2010, hold up to $143 billion in spending power, but haven't yet developed brand loyalties that dictate where they store and spend that money.

For banking and payments providers, attracting these customers while they're young could lead to lucrative relationships throughout their lives, with value increasing as they age, earn more money, and expand the number of financial products they engage with. 

Most Gen Zers haven't started using financial products beyond a bank account, which makes them a ripe opportunity for players in the space.

As a result, many firms target millennials and Gen Zers together in a push to attract younger customers, but this could be limiting their ability to effectively capture the interest of tweens, teens, and young adults, because Gen Z differs from their older counterparts. As a group, they're more responsive to influence from friends and peers than they are to traditional advertising, less likely to remember life before the internet, and more open to a wider variety of financial service providers than other consumers.

Understanding what makes Gen Zers tick is critical for marketers, strategists, and developers looking to cater to these younger customers and build out a suite of products, tools, and services that they'll want to adopt. In this report, Business Insider Intelligence will use a six-point framework — developed based on industry research and conversations — to explain the core attributes that Gen Z values in a product.

It will then explain how each of these attributes can be applied to banking and payments products, and offer actionable recommendations, strategies, and examples for how to implement them to grab younger customers ahead of the competition.

The companies mentioned in the report are: Affirm, American Express, Apple, Bank of America, Capital One, Citi, Current, Discover, Instagram, Google, Grab, Greenlight, JPMorgan Chase, Mastercard, PayPal, Uber, Venmo, Visa, Wells Fargo, Zelle

Here are some key takeaways from the report:

  • Gen Z's lack of financial services product adoption offers providers a long runway for growth. While two-thirds of Gen Zers have a bank account, many don't yet use debit cards, haven't aged into credit cards or loans, and aren't responsible for the bulk of their own spending. As they navigate life transitions, like going to college or getting a first job, there's ripe opportunity for providers to engage these customers.
  • Gen Z is more interested in digital payments products and services than any other generation. While adoption of mobile wallets has been tepid among the general population and P2P apps, like Venmo and Zelle, are just now gaining traction among older users, Gen Zers are diving in head first: Over half use digital wallets monthly, and over three-quarters use other digital payment apps or P2P apps in the same time frame.
  • To attract, engage, and retain Gen Zers, financial services firms must develop products that are social, authentic, digital-native, and educational, offer value, and evolve over time. This combination, which emphasizes key attributes that Gen Zers value, serve as a roadmap for developing offerings with features that appeal to these users in both the short and long run.

In full, the report:

  • Explains why Generation Z represents a meaningful and urgent opportunity for financial services providers.
  • Outlines a six-point framework for building services that can attract, engage, and retain Gen Zers.
  • Offers specific strategies that banks and payments providers can implement to build products tailored to this generation.
  • Evaluates examples of tactics that work in bringing Gen Zers into the fold and turning them into lifelong customers.

Interested in getting the full report? Here are two ways to access it:

  1. Purchase & download the full report from our research store. >> Purchase & Download Now
  2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of the fast-moving world of Payments.

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Europe's buzziest challenger bank Revolut is now worth $5.5 billion after raising $500 million from Silicon Valley growth fund TCV

Mon, 02/24/2020 - 7:01pm

  • European challenger bank Revolut has raised $500 million in Series D funding from Silicon Valley growth fund TCV. 
  • The long-anticipated fundraising takes the startup's post-money valuation to $5.5 billion, up from $1.7 billion previously, making it one of Europe's most valuable fintech companies. 
  • Founded in 2015, Revolut claims to have around 7 million customers and has raised $836 million to-date. 
  • The company's rapid growth has been marred by questions over its workplace culture and compliance procedures.
  •  Click here for more BI Prime stories.

Revolut, one of Europe's buzziest neo-banks, has raised $500 million in Series D funding from Silicon Valley growth fund TCV taking its valuation to $5.5 billion. 

The long-anticipated fundraising makes Revolut one of Europe's most valuable startups in the red-hot fintech sector. Other major European finance firms include payment firm Klarna, money transfer firm Transferwise, and OakNorth bank.

Revolut, founded in 2015 by the developer Vlad Yatsenko and the former Lehman Brothers and Credit Suisse trader Nikolay Storonsky, says it has around 7 million customers.

Reports had previously indicated that Revolut would take on some form of debt alongside the equity fundraise, but the company said this wasn't happening for now.

In 2018, filings show Revolut posted revenues of £58.2 million ($74 million) on a net loss of £32.8 million ($42 million). The company has yet to release figures for 2019, but says it has experienced considerable revenue and customer growth.

It is in the process of applying for a US banking license and has expanded into Europe, as well as into Australia.

The London-based company allows users to spend money worldwide in 150 currencies at a real-time exchange rate, with no fees, through a debit card. CEO Storonsky has previously outlined his goal of seeing the bank reach 100 million customers in the next five years and break into North American and Pacific markets. Revolut is available in 32 countries and previously signed a deal with Visa, with plans to take the number to 56. 

Revolut's growth has come with increased scrutiny. Wired reported on the firm's aggressive culture and tendency to ask job applicants for free work, while The Telegraph raised questions about the startup's compliance procedures. Regarding the culture, Storonsky has acknowledged "mistakes" in the running of the firm. The firm has denied compliance lapses.

SEE ALSO: Europe's popular challenger banks Revolut, Monzo, and Starling are in a fundraising arms race. Here's what we know about the mega-rounds.

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FINTECH AND FINANCIAL INCLUSION: How low-overhead direct banking models enable banks to profitably serve the US' 33 million underbanked households

Mon, 02/24/2020 - 7:01pm

Historically, the US banking industry has discussed financial inclusion solely in terms of corporate social responsibility (CSR). Offering services to the underserved — unbanked consumers who lack access to banking products, and underbanked consumers who make only limited use of mainstream financial services — has long been economically unviable. But two forces have flipped the conversation from CSR to a genuine business opportunity.

First, digital tools from mobile banking to AI are driving down costs and allowing financial institutions (FIs) to offer previously untenable products, such as fee-free accounts or credit scoring based on unconventional data.

Second, the US' financial landscape is more competitive than ever, as fintechs, incumbents, and even tech companies like Amazon vie for larger shares of the overall space. That's creating a compelling reason for banks to seek out fresh growth opportunities, and the financially underserved represent just that. And with close to 33 million US households either unbanked or underbanked, the opportunity for fast-moving banks is huge.

In Fintech and Financial Inclusion, Business Insider Intelligence explores the business opportunity for incumbent banks looking to tap the growing opportunity presented by the financially underserved, highlights through case studies how innovative players are utilizing technology to capture share in this market, and outlines recommendations for how banks can enter the space as well.

The companies mentioned in this report are: Amazon, BBVA, Chime, Citi Bank, Experian, FICO, LendingClub, Petal, and Synchrony.

Here are some of the key takeaways from the report:

  • Despite the US being one of the most developed financial ecosystems in the world, a quarter of households in the country make little or no use of mainstream banking products.
  • Several barriers have stymied underserved consumers' adoption of mainstream banking products, both from the consumer and FI perspective.
  • Innovation in digital banking channels has helped reduce some of these barriers to adoption, making financial products viable for consumers and FIs alike.
  • Banks planning to target consumers that are financially underserved need to consider a number of factors, including product fit, financial literacy, and how they measure metrics for assessing of a financial inclusion effort.

In full, the report:

  • Details the key reasons why millions of US households are either unbanked or underbanked.
  • Forecasts the market opportunity of serving this group.
  • Explores how seven players have leveraged technology to tap into this lucrative market — Citi Bank, Chime, BBVA, LendingClub, Petal, Amazon, and Synchrony Financial.
  • Provides actionable recommendations for how banks can successfully pursue a financial inclusion project.

Interested in getting the full report? Here are three ways to access it:

  1. Purchase & download the full report from our research store. >> Purchase & Download Now
  2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
  3. Current subscribers can read the report here.

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Shake Shack slips 11% after revenue forecast misses lowest Wall Street estimate (SHAK)

Mon, 02/24/2020 - 5:00pm

  • Shake Shack plunged as much as 11% after reporting lower-than-expected revenue for its fiscal fourth quarter.
  • The restaurant chain's 2020 revenue forecast also disappointed, missing the lowest estimate among Wall Street analysts.
  • Shake Shack could see a dent to near-term performance from its investments in new items and locations, but "the company will ultimately benefit from this strategy," CEO Randy Garutti said in the report.
  • Watch Shake Shack trade live here.

Shake Shack reported 2020 revenue guidance on Monday that fell below Wall Street's lowest estimate.

The restaurant chain's fiscal fourth-quarter revenue fell below expectations, while earnings per share trounced analysts' projection for a quarterly loss. Same-store sales, for locations open for at least two years, fell more than anticipated in the quarter ending December 25.

Shake Shack stock tumbled as much as 11% in late Monday trading, extending the 1.6% fall seen during the day's regular trading hours.

Here are the key numbers:

Revenue: $151.4 million, versus the $153.1 million estimate.

Adjusted earnings per share: $0.06, versus the -$0.01 estimate.

Same-store sales: -3.6%, versus the -2.5% estimate.

2020 revenue guidance: $712 million to $720 million, versus the $735.6 million estimate (range of $722 million to $762 million from analysts surveyed by Bloomberg).

The company attributed its sales miss to the relatively short holiday season in 2019, favorable weather in the year prior, and "less menu innovation."

Shake Shack aims to hit double-digit earnings growth in the near future by investing in new menu items, partnerships, and new locations. The company's CEO warned such upfront costs could lower performance in upcoming quarters but assured investors of their future value.

"We recognize this level of growth and investment, at times, can have a near-term impact on same-Shack sales and other aspects of our financial performance, but we believe the company will ultimately benefit from this strategy over time," CEO Randy Garutti said in the report.

Shake Shack closed at $73.57 per share on Monday, up about 20% year-to-date.

The company has four "buy" ratings, 12 "hold" ratings, and two "sell" ratings from analysts, with a consensus price target of $72.17, according to Bloomberg data.

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Intuit is nearing a $7 billion deal to acquire Credit Karma — here's what the TurboTax owner has to gain from the buzzy startup known for its free credit scores

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REPORT: Ant Financial and Tencent are rapidly growing their financial services ecosystems — here's exactly what they offer and where we think they'll go next (TCEHY)

Mon, 02/24/2020 - 5:00pm

Over the past 15 years, spending in China has become increasingly powered by mobile payments. In Q4 2018, China's third-party mobile payments industry was estimated to be worth 47.2 trillion yuan ($6.8 trillion) per Analysys, as cited by TechNode. This eclipsed the country's total retail sales for all of 2018, which came in at 38.1 trillion yuan ($5.5 trillion).

The mobile payments market is controlled by Ant Financial's Alipay, which held a leading 53.8% market share in Q4 2018, and Tencent's WeChat Pay, which, along with fellow Tencent-owned payment service QQ Wallet, commanded a 38.9% share.

Ant and Tencent's combined mobile payments dominance means that other companies need to actively work with or against the powerhouses, especially as they've also stretched into other financial services, including peer-to-peer (P2P) payments, cross-border capabilities, wealth management features, consumer lending, and insurance. 

Payments companies worldwide must take notice of Ant Financial and Tencent's success, strategies, and potential expansion, as they won't succeed in the extremely valuable Chinese market without understanding how the two companies are expanding their reach. And those payments companies settled in other countries should also familiarize themselves with the two companies and their successes, as both have been expanding internationally.

In Fintech Disruptors From The East, Business Insider Intelligence looks at a variety of financial services offered by Ant Financial and Tencent, the different categories they fall under, and the benefits each one offers the firms. We also examine their current strategies for expansion and consider the steps they may take in the future to grow their businesses, both in China and abroad.

The companies mentioned in this report are: Alibaba, Alipay, Ant Financial, Chase, Citcon, First Data, GCash, Go-Jek, Grab, JD.com, Line, Moneygram International, Paytm, QQ, Telenor Microfinance Bank, Tencent, Uber, WeBank, WeChat, WeChat Pay, WeChat Payments Score, Weixin, WeSure, and Wirecard.

Here are some of the key takeaways from the report:

  • Ant Financial and Tencent dominate China's huge mobile payments industry through Alipay and WeChat Pay, and both firms have built cohesive financial ecosystems to further attract consumers and their funds.
  • Generally, Ant Financial's payments and financial services are further developed, but Tencent's huge user base thanks to WeChat has helped it gain ground.
  • Ant and Tencent have expanded their services in Southeast Asia, but Ant appears more interested in further growing its reach.

In full, the report:

  • Examines the financial ecosystems of Ant Financial and Tencent.
  • Analyzes the offerings of Alipay and WeChat Pay as well as how they grew to their current positions atop the Chinese mobile payment market.
  • Details Ant Financial and Tencent's financial features beyond Alipay and WeChat Pay and how they create a more comprehensive slate of offerings.
  • Looks at the expansion of both companies and considers what each may do next, both in China and abroad.

Interested in getting the full report? Here are two ways to access it:

  1. Purchase & download the full report from our research store. >> Purchase & Download Now
  2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of Ant Financial and Tencent's rapidly expanding array of financial services.

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Intuit is set to buy Credit Karma for $7.1 billion — here's what the TurboTax owner has to gain from the buzzy startup known for its free credit scores

Mon, 02/24/2020 - 4:54pm

  • Intuit has agreed to acquire Credit Karma for $7.1 billion in a half cash, half stock deal.
  • Credit Karma has long been known for free credit scores, but has since launched a free tax filing platform, high-yield savings accounts, and other personal finance management products.
  • Intuit is the company behind TurboTax, the popular tax filing service, personal finance tool Mint, and credit score-driven personal finance platform, Turbo.
  • The acquisition will give Intuit access to both credit and income data from Credit Karma's 106 million users.
  • But there are concerns that Intuit and Credit Karma's competing tax filing products could raise antitrust concerns should the deal move forward and undergo regulatory review.
  • Click here for more BI Prime stories.

Intuit, the company behind the popular online tax filing service TurboTax and personal finance platform Mint, has agreed to acquire Credit Karma for $7.1 billion in a half cash, half stock deal. 

Credit Karma has long been known for free credit scores. But in the last decade, it's launched several other products including a free tax filing service, identity monitoring, and a high-yield savings account. It has 106 million users and says 1 in 2 millennials are on the platform. 

By acquiring Credit Karma, Intuit will increase its access to consumer financial data significantly. But according to analysts, both companies' competing tax filing products could prove an antitrust concern, should the deal move forward for review by regulators.

When asked on Intuit's fiscal second quarter earnings call, Intuit's CEO Sasan Goodarzi confirmed that Credit Karma and Intuit's tax offerings will remain separate products.

Talks of the deal were first reported by the Wall Street Journal. Under the deal, Credit Karma will operate as an independent unit, continuing to be led by CEO Ken Lin, the companies confirmed on the earnings call.

Goldman Sachs served as Credit Karma's financial advisor on the deal, and Qatalyst Partners served as financial advisor for Intuit. The deal is expected to close in the second half of 2020, according to a press release.

As part of the acquisition, the two companies will look to create personal finance management products, according to a press release.

Valued at $4 billion, Credit Karma has raised around $370 million in VC funding to date — its last round was a $175 Series D in 2015 — from investors including Felicis Ventures, Founders Fund, and Tiger Global Management. In 2018, it sold a $500 million stake to Silver Lake Capital in a secondary share round.

Intuit's stock was up about 2% after earnings were reported on Monday afternoon.

Product overlaps

Since founding the company in 2007, Lin has stressed the importance of keeping Credit Karma's products free for consumers, and that remains the case across all its products, including tax filing, which was launched in 2016.

Instead of charging consumers for its products, Credit Karma makes money with user data. The fintech doesn't sell user data, but instead makes money through referrals. 

Analyzing both credit data and income data from tax filings, Credit Karma can recommend financial products like personal loans and credit cards to its users. It earns a commission from banks and lenders if a user gets approved for a recommended product.

And that data is a key piece of Credit Karma's value.

"In our minds the Credit Karma deal would revolve around a data play, making the company likely the best and largest source of personal financial data that could both dramatically increase the predictive power of the referral business as well as likely lower the cost of customer acquisition for Intuit across its entire portfolio," said Alex Zukin, software equity researcher at RBC, in emailed comments.

An emphasis on free

While Credit Karma doesn't charge its users, Intuit's flagship TurboTax operates a bit differently.

TurboTax offers a freemium model, with a free product offered alongside fee-based options.

Intuit is a member of an industry group known as the Free File Alliance, which partnered with the IRS to provide those with income under $69,000 per year access to free federal tax returns via the Alliance members' platforms. It's worth noting that these platforms can still charge for state returns, and Intuit has come under scrutiny for its lobbying against free government-sponsored tax filings.

Credit Karma, which is not a part of the Free File Alliance, offers both federal and state tax filings for free to all registered users, regardless of income.

The two companies' tax products have been highlighted as a possible antitrust concern if a deal were to be reviewed by regulators.

"Our initial investor conversations have been skeptical though on the basis of potential antitrust scrutiny on the tax side, general lack of business model synergy understanding and fears about cannibalization and execution risk," Zukin said.

In 2018, Intuit launched a personal finance platform called Turbo as an extension of TurboTax. It combines tax-based income data with credit score data to offer consumers a similar level of financial wellness transparency that Credit Karma is known for.

Intuit is also the parent company of Mint, another personal finance startup it acquired in 2009.

Given Credit Karma's scope and scale, the acquisition could help Intuit push further into personal finance management, an already crowded space. 

"We appreciate Intuit's pursuit of growing its consumer finance platform and view the proposed addition of Credit Karma a logical strategic expansion," Oppenheimer analyst Scott Schneeberger said in a statement.

While it may have been "overly ambitious" to see Turbo as a key component of Intuit's flagship products, Schneeberger said, a combination with Credit Karma would add "significant commitment/credibility" to Intuit's personal finance ambitions.

Goodarzi confirmed on the earnings call Intuit has plans to ultimately consolidate Mint and Turbo as one personal finance product, but it will remain separate to Credit Karma's personal finance platform.

"There's a lot of innovation and investment in FinTech, but we don't see anyone, with our collective capabilities, pursuing a personalized financial assistant to help consumers take control of their financial lives," said Sasan Goodarzi, CEO of Intuit, in a press release.

Prior to news of the potential Intuit deal, Credit Karma was pegged as a 2020 IPO likely, according to reports from the Wall Street Journal and CNBC. In December, Lin told Business Insider that launching more financial products were his priority before considering an IPO.

To be sure, public markets have not been so friendly as of late to fast-growing tech companies, especially those that aren't profitable. With high-profile names like Uber and Lyft falling after their IPOs, there is more scrutiny on growth and profitability.

Credit Karma, which has not publicly released information on its earnings, has indicated it is profitable according to past media reports.

SEE ALSO: Credit Karma's CEO is focused on developing new products as the $4 billion fintech does more than just free credit scores

SEE ALSO: Morgan Stanley's $13 billion E-Trade deal is a sign banks are ready to 'open up their pocketbooks' for fintechs, insider says. Here's what that could mean for buzzy startups' valuations.

SEE ALSO: How this woman went from a Pizza Hut employee to a founder of a $4 billion startup

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Cash-strapped Chinese companies say they could collapse within months as coronavirus spreads

Mon, 02/24/2020 - 4:33pm

  • As a deadly viral outbreak halts activity across China, millions of businesses are struggling to stay afloat.
  • In a recent survey of small- and medium-sized businesses across China, a third of respondents said they would only be able to cover fixed expenses for one month. 
  • Another third said they expected to run out of cash within two months, while only 10% said they would be able to hold out through the second half of the year.
  • Visit Business Insider's homepage for more stories.

As a deadly viral outbreak halts activity across China, millions of businesses are struggling to stay afloat.

Efforts to contain the novel coronavirus have led to costly travel and commerce restrictions, creating a crunch that could shut down some of the most vulnerable businesses in the second-largest economy. 

The roughly 30 million small- and medium-sized businesses across China have been hit particularly hard by the outbreak, which has killed more than 2,500 in the nation and sickened tens of thousands more. 

In a February survey of small- and medium-sized businesses in China, the epicenter of the coronavirus, one-third of respondents said they would be able to cover fixed expenses for only one month. 

Another third said they expected to run out of cash within two months, according to the February survey conducted by the Chinese Association of Small and Medium Enterprises. Only 10% said they would be able to hold out through the second half of the year.

"China started returning to work on February 10, but high frequency data suggests the economy is far from running at full capacity," said Mark Haefele, the chief investment officer at UBS Global Wealth Management. 

Against a backdrop of a crackdown on lending and a trade dispute with the US, Chinese businesses not backed by the government were already under pressure before the coronavirus outbreak began to escalate in early 2020. 

The blow could be significant in the second-largest economy, which forecasters said this year could post its first quarterly contraction in decades. Private businesses in China fuel about 60% of gross domestic product, 80% of jobs, three-quarters of technological innovation and more than half of tax revenue, according to internal estimates.

Seeking to soften the blow, the Chinese government has cut interest rates and asked banks to offer more credit. But the moves may not be enough to keep small- and medium-sized businesses up and running.

"China will respond to the coronavirus with extra monetary and fiscal stimulus," Andrea Cicione, the head of macro strategy at TS Lombard, said in a research note this month. "This will matter little in the end unless earnings start growing again."

SEE ALSO: The White House is preparing to ask Congress for emergency funding as coronavirus hits the US

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NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

TurboTax vs. H&R Block: Which tax software should you choose this year?

Mon, 02/24/2020 - 4:22pm

  • TurboTax and H&R Block are the two biggest tax preparation services in the United States.
  • Both TurboTax and H&R Block should give you the same refund results if you enter your information accurately, so the best choice comes down to cost and experience.
  • TurboTax offers a slightly better online experience while H&R Block is best for people who may want to upgrade for in-person support.
  • Try TurboTax or H&R Block before Tax Day 2020 »

It's the peak of tax season. By the end of February, most people have all of their W-2s, 1099s, and other tax forms required to do their taxes. 

If you are about to start and are not sure if TurboTax or H&R Block is a better fit for your needs, here's a look at the key features each tax software offers.

TurboTax vs. H&R Block overview

TurboTax and H&R Block are two of the biggest tax preparation software options in the US. TurboTax comes from Intuit, the company behind popular accounting software QuickBooks and personal finance app Mint. H&R Block is one of the biggest tax preparation services in the US with both physical locations and digital tax-prep software.

TurboTax is the most-used tax preparation software in the US. It comes in both an online, cloud-based version and a desktop version for download. There are different versions based on your unique filing needs. As your taxes become more complex, you'll pay more for additional features. For an added fee, you can get a service with quick access to a tax expert around the clock to answer questions about your own personal tax situation.

H&R Block is a huge tax preparation service that prepared more than 20 million returns for 2018. In addition to online and desktop software, H&R Block has 12,000 locations around the country. This makes it a popular option for either do-it-yourself or professional tax preparation.

Here's a look at the details for each version, what each costs, and what it's like to file your taxes with each service.

TurboTax vs. H&R Block versions and pricing

TurboTax offers four versions: Free, Deluxe, Premier, and Self-Employed. Costs range from free to $120 for a federal return depending on the version you choose. State returns cost extra, typically $45 per state, unless there's a sale.

  • The Free Edition is free for both federal and state returns but only works for the simplest taxes.
  • Deluxe is the most popular version and costs $60 and includes 350 deductions and credits, including mortgage and donation-related deductions.
  • Premier has a $90 price tag and supports taxes for investments and rental properties.
  • The most expensive version, Self-Employed, includes added features for freelancers, contractors, and other small business owners. It costs $120.

H&R Block Online comes in four flavors as well. It is a bit cheaper than TurboTax for a very similar offering. 

  • Free Online works for basics like a W-2 and child-related deductions.
  • Deluxe Online costs $49.99 and includes popular deductions for homeowners and those with HSA accounts.
  • Premium Online costs $69.99 and adds in support for investments and independent contractors.
  • Self-Employed Online handles most business needs at a $169.99 price tag. States are $36.99 extra.

If you are shopping based on price alone, H&R Block is the winner. But as we will see in the next sections, price isn't the only factor to consider.

TurboTax vs. H&R Block: The online experience

The online experience from both TurboTax and H&R Block is a good one. I have used both to file my own taxes and didn't have any serious complaints about either. I did find the TurboTax experience to be a bit easier to navigate, but H&R Block does a very nice job as well.

TurboTax makes it easy to find any form through the search feature, or you can follow its guided tax preparation to enter your forms in the order suggested by TurboTax. You can upload PDF versions of some forms if you have them, or type in the numbers yourself.

H&R Block also makes it easy to navigate through your taxes, add forms, and enter your details. I found it a bit more regimented about finishing things in order than TurboTax. But the forms and questions were very similar. It also offers the option to upload your forms rather than type them in manually for popular forms like the W-2.

While I like the TurboTax experience a little more, it really comes down to personal preference. Both online tax apps offer forms that ask the exact same questions. Looking at the forms above, you can see how similar they look. I'm going to call TurboTax the winner, but just by a hair.

TurboTax vs. H&R Block: Getting help from an expert

H&R Block is the longtime winner in this category, and that's not going to change this year. Thanks to its huge network of locations, H&R Block makes it easier than any other company to get help from a person with your taxes. There are nearly as many H&R Block locations as McDonald's. 

H&R Block has a few ways to get help from a person. These range from upgrading for help from a tax pro online to getting a full second set of eyes to review your taxes in store. The Online Assist program, which gives you access to an expert through chat and screen sharing, drives up the cost by about $40 to $80 depending on which version of H&R Block you use.

TurboTax isn't letting H&R Block get too far ahead, however. It has its own online help service offering access to a professional. TurboTax Live is about $50 to $90 more than the fully DIY option.

The live expert offerings from H&R Block and TurboTax are overall very similar. But, thanks to the thousands of locations around the country, H&R Block remains the winner on this front.

You should get the same results either way

In the years I did my taxes the whole way through with both TurboTax and H&R Block, my results were nearly identical, which is what you would expect with accurate tax returns. That means the difference really comes down to cost, tax prep experience, and access to an expert.

If you want the most polished experience and are willing to pay a few bucks more, TurboTax is the better choice. If you're happy with something that works well and is a bit cheaper, H&R Block is a solid option. If you want the added option of in-person help from an expert, H&R Block is definitely the better choice.

Either way, you're getting a high-quality tax preparation experience. If you follow the prompts and enter all of your details accurately, you should come out on the other side with the same results and your biggest possible refund. What more could you ask for?

TurboTax and H&R Block are both great options for Tax Day 2020 »

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NOW WATCH: Most maps of Louisiana aren't entirely right. Here's what the state really looks like.

US stocks drop the most in 2 years as coronavirus fears rattle traders

Mon, 02/24/2020 - 4:13pm

  • US stocks were swept up in a global sell-off on Monday as investors grappled with spreading coronavirus fears.
  • The Dow Jones industrial average plummeted as much as 1,080 points — or 3.7% — on Monday. That erased the index's gains for the year.
  • The S&P 500 slid 3.4%, its biggest loss since February 2018.
  • Meanwhile, the Cboe Volatility Index — or VIX, widely known as the stock market's fear gauge — spiked as much as 54% to levels not seen since early 2019.
  • The flight out of risk assets and into safe havens sent the US 30-year Treasury yield to a record low, and gold is trading at the most expensive levels all year.
  • Read more on Business Insider.

US stocks were swept up in a global sell-off on Monday as fears over the spreading coronavirus — and its negative economic implications — rattled investor nerves.

The Dow Jones industrial average fell more than 1,000 points in on Tuesday for a 3.7% decline. That erased the index's gains for the year. The S&P 500 tumbled roughly 3.4%, while the tech-heavy Nasdaq Composite index lost 3.7%.

Meanwhile, the Cboe Volatility Index — or VIX, which is widely known as the stock market's fear gauge — spiked as much as 54% to its highest level since early 2019.

The latest sharp move lower comes as the coronavirus outbreak has spread to more than 30 countries. Over the weekend, delegates at the Group of 20 meeting of major economies warned that coronavirus could undermine global growth. The IMF also cut its yearly growth projection for China by 0.4 percentage points.

Here's how the major US indices closed: 

Dow Jones industrial average: Down 1,032 points, or 3.6% — intraday low down 1,080 points

S&P 500: Down 3.3% — intraday low -3.7%

Nasdaq Composite: Down 3.7% — intraday low -4.3% 

Read more: 'It's a clear bubble': A former Goldman Sachs hedge fund chief sounds the alarm on flailing stocks — and warns the nefarious effects of coronavirus have 'only just started'

Every sector in the S&P 500 traded in the red, with the energy (-4.7%) and information technology (-4.2%) indices leading declines.

Advanced Micro Devices — a semiconductor maker with significant supply chain exposure in China — saw the most active trading in the early market and tumbled roughly 8%.

Fear about how coronavirus could disrupt the supply chains and growth of the world's corporations were also responsible for rattling markets on Monday. Apple, Disney, and Starbucks are some of the highest profile names that have seen disruptions in their businesses because of the virus. 

Meanwhile, investors are fleeing to higher ground: Safe-haven asset gold reached $1,687 Monday, the most expensive all year. The yield on the 30-year US Treasury fell to a historic low of 1.8%, while the yield on the 10-year fell to 1.4%, a low not seen since 2016. Price moves inverse to yield. 

Read more: A Wall Street firm lists its 5 best hedges for an unusual coronavirus-driven market crash — and shares what to do if it's successfully contained

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NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

The market's favorite recession indicator flashed its starkest warning since October amid the coronavirus outbreak

Mon, 02/24/2020 - 4:12pm

  • On Monday, the curve inversion between 3-month and 10-year US Treasury bond yields fell to its most negative point since October amid concern over the coronavirus outbreak. 
  • The yield on the 10-year US Treasury fell to 1.3% as prices rallied, below the 3-month US Treasury at 1.5%. 
  • "Investors are pretty pessimistic about future US GDP growth and interest rates," Dev Kantesaria of Valley Forge Capital Management said in an interview with Markets Insider. 
  • Read more on Business Insider.

A popular recession indicator just flashed its most serious warning in months amid worry around the coronavirus outbreak. 

The yield curve inversion between 3-month and 10-year US Treasury bonds fell on Monday to its most negative point since October. An inverted yield curve has preceeded all US recessions since 1950. 

A flight to safety amid mounting fears that the coronavirus will slow global growth sent 10-year US Treasury yields plummeting to 1.3% Monday, below the 3-month yield of 1.5%. The 30-year yield also slipped to 1.8%, a historic low. 

"That's pretty remarkable, as it shows that investors are pretty pessimistic about future US GDP growth and interest rates," Dev Kantesaria, a portfolio manager and founder of Valley Forge Capital Management, said in an interview with Markets Insider. 

The bond market is now pricing in two interest rate cuts from the Federal Reserve, even though it said it plans to leave rates unchanged this year. As the virus has spread, it's infected nearly 80,000 people and killed more than 2,600 across 30 countries, sparking fears of a global pandemic. 

If the outbreak continues and does hinder global growth, the US economy could take a hit. On Monday, Goldman Sachs lowered its US GDP growth forecast by 0.2 percentage points amid coronavirus worry. Global stocks tanked Monday as concerns over the virus' spread mounted. The Dow Jones Industrial Average fell more than 1,000 points, and the S&P 500 and the Nasdaq pared losses. 

If US economic growth is impacted, or the country falls into a recession, long-term interest rates could approach zero, Kantesaria said. "If investors can look past the current market, the low interest rate environment is highly bullish for equity investors," he said. 

But that might not happen right away, he said. In the near term, "it could get quite scary in the marketplace," Kantesaria said.

Join the conversation about this story »

NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

A look at the demanding schedule of Elon Musk, who plans his day in 5-minute slots, constantly multitasks, and avoids phone calls

Mon, 02/24/2020 - 3:51pm

  • Elon Musk is so busy running both Tesla and SpaceX that he schedules his day out into five-minute slots.
  • Musk finds time to sleep six hours a night, despite working between 85 to 100 hours each week.
  • The billionaire finds time to spend with his five children during the workweek, but said in 2013 that he still checks his email when he is with them.
  • Visit Business Insider's homepage for more stories.

Elon Musk is one busy guy.

The billionaire CEO of Tesla and SpaceX generally spends a full workweek at each of his two companies, wolfing down lunch in five minutes and skipping phone calls for productivity's sake.

So it's not surprising that his daily life is pretty jam-packed.

Based on previous interviews, Business Insider pieced together an estimation of what an average day looks like for Musk.

SEE ALSO: Robert F. Smith on becoming the richest black man in America, what companies get wrong about diversity, and what he's doing to help mint more black billionaires

DON'T MISS: Elon Musk made almost $12 billion in the past week as Tesla's stock soars. Here's how the eccentric CEO makes and spends his $45.2 billion fortune.

Musk kicks off his day bright and early, rising at about 7 a.m. In a Reddit AMA, he said he usually gets "almost exactly 6 hours on average."

Source: Business Insider



Musk usually skips breakfast. Occasionally, he will slow down long enough to grab a quick coffee and an omelette.

Source: Auto Bild



One thing he always makes time for, no matter what? Showering. He once wrote on Reddit that it had a greater positive impact on him than any of his other daily habits.

Source: Business Insider



Once he's up, Musk launches into a blistering schedule that breaks his time into a series of five-minute slots. The entrepreneur has been known to work 85 to 100 hours a week, and he estimates that 80% of his time at work is spent on engineering and design.

Sources: Inc., The Independent, Y Combinator



No two days are the same for Musk. He spends Mondays and Fridays at SpaceX in Los Angeles. On Tuesdays, Wednesdays, and Thursdays, he heads to the Bay Area to work at Tesla. Quartz estimates that he spends an average of 42 hours a week working at Tesla and 40 hours a week working at SpaceX. He also told Y Combinator that he usually spent about half a day working at the artificial intelligence nonprofit OpenAI.

Source: Quartz, Y Combinator



On the weekends, it's more of a toss-up. Sundays are usually spent traveling or staying at his Bel Air mansion. On Saturday, he either works at SpaceX ...

Source: Business Insider



... or spends time with his five young sons. Speaking about his kids in 2013, he said: "What I find is I'm able to be with them and still be on email. I can be with them and still be working at the same time ... If I didn't, I wouldn't be able to get my job done."

Source: Business Insider, Business Insider



Multitasking is a crucial part of Musk's strategy, which he calls "batching." Musk often works on his phone while sitting in meetings.

Source: Inc.



To keep his work day on track, Musk forgoes most phone calls in favor of email and texts. He also prefers to use an obscure email address to prevent people from spamming his inbox.

Source: Inc.



He doesn't spend much time on meals. Musk usually takes his lunch during a meeting, and he manages to wolf it down in just five minutes.

Source: Auto Bild



He ends up getting most of his calories later in the day. "Business dinners are probably where I eat way too much," he told Auto Bild.

Source: Auto Bild



When it comes to food, one of his favorites is Diet Coke, thanks to "some infernal ingredient." Musk told Auto Bild that he had since cut back on the soda. CBS previously reported on the tech mogul's preference for French food, barbecue, and whiskey.

Sources: Auto Bild, CBS



To stay in shape, Musk usually hits the gym about once or twice a week.

Source: Auto Bild



Despite his busy life, he also carves out enough time to read. Some of his favorite titles include the fantasy classic "The Lord of the Rings," biographies of innovators like Benjamin Franklin and Albert Einstein, and an obscure 87-year-old history book on adventurers called "Twelve Against the Gods."

Sources: Business Insider, Business Insider



Musk may be a bookworm, but that doesn't mean he can't party. The entrepreneur's legendary bashes have included a birthday party at an English castle that turned into a big game of hide-and-seek, and inviting a knife-thrower to pop balloons that he held between his legs.

Sources: Entrepreneur and Business Insider



When all is said and done, Musk usually doesn't crash until 1 a.m. That late bedtime isn't too surprising for a man who's busy trying to send humans to Mars.

Source: Entrepreneur



Emergency rate cuts won't be enough to save the unstable stock market, top market strategist warns

Mon, 02/24/2020 - 3:44pm

  • Traders are boosting their bets on central banks cutting rates as coronavirus deaths spike, but such policy won't do much for stock markets, Seema Shah, chief investment strategist at Principal Global Investors, said Monday.
  • Rate cuts primarily strengthen borrowing and, in turn, demand. Such policy won't insulate markets "against supply-side concerns," Shah wrote in an emailed statement.
  • Investors should pivot to protecting their portfolios and avoid buying stocks at lower prices, she added, as markets have already demonstrated "over-complacent" behavior toward coronavirus news.
  • Shah recommended investors watch European companies for profit warnings, as the export-heavy economy faces great risk from a manufacturing slowdown.
  • Visit the Business Insider homepage for more stories.

Investors looking to buy stock during Monday's dip shouldn't expect much help from central bank policy, Seema Shah, chief investment strategist at Principal Global Investors, said Monday.

Traders are boosting their bets on central banks cutting rates as coronavirus fears roil markets. Lower rates bring cheaper borrowing, and cheaper borrowing often brings increased spending. Investors are betting on two interest rate cuts from the Federal Reserve in 2020, according to Bloomberg, but Shah doesn't think such action would provide markets with the cushion many are looking for.

Rate cuts might provide a small boost to demand, but coronavirus' hit to global supply chains isn't easily averted and can drag stock prices lower, the strategist said. Apple warned on February 17 that its next-quarter revenue will land below initial guidance as "temporarily constrained" iPhone supply and weak demand in China dented sales. Other companies including Tesla, Starbucks, and Nike have alerted investors to earnings risk related to the outbreak. 

The market just learned that rate cuts won't "insulate it against supply-side concerns" and push stocks higher, Shah said in emailed comments.

"While further Fed cuts, and potentially an ECB cut, may be priced in, easier liquidity conditions may be insufficient to prop up equity markets if coronavirus concerns continue to escalate," she wrote. "Monetary policy is not optimized for addressing a shock such as this."

Global stocks tumbled in Monday's trading session after a spike in virus-related deaths outside China fueled new fears that the outbreak will harm global growth. Investors flocked to safe-haven assets, driving gold near $1,700 per ounce and pushing the yield of the 10-year Treasury bond to its lowest-ever level.

Some analysts viewed Monday's drop as a prime buying opportunity before the record-long bull run resumes. US stock prices sat at record highs as recently as last week, already surging higher after investors shrugged off initial reports of the virus' severity. The "over-complacent" reaction seen earlier in February should motivate investors to take defensive positions before another plunge, Shah said.

"Given these over-valuations and market susceptibility to negative news flow surrounding the outbreak, investors should look to protect their portfolios and resist the urge to buy the dip," the strategist wrote.

Shah recommends investors watch for new profit warnings in Europe to signal markets' next step lower. The continent's risk asset valuations "may have peaked," according to the strategist. Europe's economy relies heavily on export activity, and its entire stock market is at risk if coronavirus harms manufacturing activity, Shah said.

Principal Global Investors manages $476.4 billion worth of assets.

The S&P 500 was down about 2.7% as of 3:15 p.m. ET Monday.

Now read more markets coverage from Markets Insider and Business Insider:

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Fidelity and Charles Schwab say some users ran into technical issues in early trading as stocks tanked the most since August

Intuit is reportedly about to buy Credit Karma for $7 billion, and a Wall Street analyst says it could give Intuit's AI a much-needed boost

Join the conversation about this story »

NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

This is the 19-slide pitch deck two 22-year-olds used to nab $57 million in funding from Silicon Valley

Mon, 02/24/2020 - 3:01pm

Technology is shattering legacy financial systems that can't keep pace with market demand — and Brex is at the forefront. It's one of fintechs buzziest startups, aiming to rebuild B2B financial products starting with corporate cards for technology companies.

The company was quietly launched in 2017 by Henrique Dubugras and Pedro Franceschi, two 22-year-old engineers who previously founded Pagar.me, one of Brazil's largest payment processors.

Brex already has more than 1,000 customers signed up with the help of backing from investors including PayPal co-founders Peter Thiel and Max Levchin, early Facebook investor Yuri Milner, former Visa CEO Carl Pascarella, and esteemed startup incubator Y Combinator.

And we caught a glimpse of the Series B pitch deck Dubugras and Franceschi used to win them over. 

In it, they lay out a clear problem: Technology startups often had trouble securing corporate credit cards — even if they had millions in the bank — because legacy banks and card issuers wanted to see company credit histories, which young institutions simply couldn't produce.

They had a simple solution: Remove the restrictions of legacy technology by giving instant approval to startups based on their available cash balance, including money raised through venture, rather than credit history. 

In the deck, the founders outlined their plans to help startups of all sizes instantly get cards with higher limits, as well as automatic expense management and seamless integration with existing accounting systems.

As part of our coverage of the genesis of today's successful companies, BI Prime received Brex's permission to offer a look into the startup's full 19-slide pitch deck, which includes considerations such as:

  • The startup's mission
  • Key team members and previous backers
  • The size of the market opportunity
  • A step-by-step plan of how to solve credit cards for startups
  • Some of the card's coolest features
  • Data points showing how to scale the business

BI Prime is publishing dozens of stories like this each and every day. Want to get started by reading the full pitch deck?

>> Download it now FREE

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Amex Offers can save you money and earn you bonus points at Cole Haan, Blue Apron, and more — here are some of the offers you can get right now

Mon, 02/24/2020 - 2:45pm

 

I love the Amex Platinum card for widely known perks like airport lounge access and 5x points on flights booked directly with the airline, but the card also comes with some lesser-known benefits that can save you money.

One of those benefits that's available through virtually every Amex card, but isn't the most widely known, is Amex Offers. In this past year alone, I've used offers to save money on purchases from J.Crew, Instacart, and FreshDirect, and to earn bonus points at Amazon.

What are Amex Offers?

The Amex Offers program provides cardholders with discounts at various stores, restaurants, or services, or, if not a discount, then chances to earn extra points.

The interesting part of the program is that each offer is specifically targeted to individual users and each user's individual cards. That means that you and I might get different offers, and I might even see different offers across my several different Amex cards. That adds a real benefit to having multiple Amex cards — even if you just use them to be eligible for more offers, you have a better chance of getting good ones.

One of the appeals of the Amex Offers program is that the offers continuously change. Offers can be for national brands, but are also targeted based on your billing address — for example, I have a few offers for shops and restaurants that have a New York City location.

Current Amex Offers

Here are some of the particularly interesting Amex Offers currently available. Keep in mind that some of may no longer be available, and some are specifically targeted.

  • Spend $100 or more at FreshDirect, get $30 back (up to 2 times).
  • Get 4 extra Membership Rewards points on every dollar spent at Adidas.
  • Spend $50 or more at Blue Apron, get 2,000 Membership Rewards points.
  • Spend $75 or more at Boxed, get $20 back.
  • Get 6 extra Membership Rewards points on every dollar spent at Cole Haan, up to 10,000 points.
  • Spend $175 or more at Glasses.com, get $35 back.
  • Spend $150 or more at Sunglass Hut, get $30 back.
  • Spend $250 or more with Marriott, get $50 back.
  • Spend $250 or more at Theory, get 5,000 Membership Rewards points.
  • Spend $185 or more at The Wall Street Journal, get $75 back.

If you're interested in opening a new Amex card — in addition to getting access to more Amex offers, you can earn a lucrative welcome offer — take a look at our up-to-date list of best Amex cards.

$550 annual fee: Click here to learn more about the Amex Platinum card » $250 annual fee: Click here to learn more about the Amex Gold card »

More credit card coverage

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Ellen DeGeneres is one of the richest self-made women in America. Here's how the comedian spends her $330 million fortune, from flipping houses to luxury sports cars.

Mon, 02/24/2020 - 2:27pm

Comedian Ellen DeGeneres has become a household name since performing stand-up in Louisiana.

After coming out on her hit sitcom, "Ellen," and in Time magazine during the '90s, DeGeneres said she stopped receiving work for several years and began running out of money. But after voicing Dory in "Finding Nemo" and launching her talk show, "The Ellen DeGeneres Show," in the early 2000s, she paved her way back to fame.

Today, DeGeneres has an estimated $330 million net worth, making her one of America's richest self-made women. One of her favorite ways to make and spend money is by flipping real estate with her wife, Portia de Rossi. 

DeGeneres' money habits have largely been shaped by her poor upbringing. She's previously said it's why she doesn't financially restrict herself and that it sparked her zeal for real estate. DeGeneres is also known for her philanthropic efforts, giving to both animals and people in need.

Here's how the comedian spends her millions.

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Ellen DeGeneres has an estimated net worth of $330 million thanks to her career in television.

Source: Forbes



DeGeneres began her career as a stand-up comedian in New Orleans before rising to fame as an actress.

Source: Forbes



From 1994 to 1998, she starred in her first sitcom, "Ellen." She also guest-starred in multiple sitcoms during the '90s.

Source: Parade



But she stopped receiving work for several years after coming out on "Ellen" and in Time magazine in 1997, DeGeneres said in an interview. She had been running out of money, she said.

Source: Hollywood.com



But being asked to voice Dory in "Finding Nemo" in 2000 saved her, she said, adding that "it was like $75,000 for three years of work."

She also went on to voice Dory in the Finding Nemo sequel.

Source: Hollywood.com



In 2003, "The Ellen DeGeneres Show" premiered. By 2017, she was earning an estimated $50 million a year from the show, making her the highest paid TV host at the time.

Source: Forbes, Forbes, Variety



More than half of DeGeneres' earnings come from the daily talk show — she receives about 60% of advertising, carrying fee, and product placement profits.

Source: Forbes



But DeGeneres also earns millions working behind the camera with her own production company, A Very Good Production.

Source: Forbes, Forbes, Yahoo! Finance



She's also had many endorsement deals with lucrative brands such as CoverGirl, JCPenney, and American Express.

Source: The Street



That's not to mention the several books DeGeneres has published over the years, from comic essays to tours of her many homes.

Source: Amazon



In 2014, DeGeneres hosted the Oscars. It's unknown how much she was paid, but the union minimum was $15,000 in 2017.

Source: The Guardian



In 2015, she launched lifestyle brand ED by Ellen, which features everything from home goods to clothes. She has an online shop, but the line is also featured at various retailers, from Bed Bath & Beyond to Nordstrom.

Source: Hello Giggles, Nordstrom, ED by Ellen, Bed Bath & Beyond



DeGeneres has also built a strong digital presence with Ellen Digital Ventures, which encompasses platforms such as video hub Ellentube and iPhone game Heads Up!

Source: Fortune, Ellentube



She expanded her digital realm in 2016 by launching Ellen Digital Network with Warner Bros., which focuses on new web and social media programming.

Source: Fortune



And in 2018, she signed a $20 million deal with Netflix for an exclusive stand-up special.

Source: Forbes



She earned $80.5 million in 2019, making her the 22nd highest-paid celebrity in the world, according to Forbes.

Source: Forbes



It's no wonder DeGeneres is one of America's richest self-made women. Here's how she spends her fortune.

Source: Forbes



DeGeneres has spent and made millions flipping nearly 20 luxury homes since 2003, although she's said this hobby is out of enjoyment more than anything.

Source: Business Insider, Architectural Digest



"The first thing I did when I made money was buy a house," she told Architectural Digest in 2011.

Source: Architectural Digest



That first purchase was a $6 million Hollywood Hills home in 2003. She later sold it to Will Ferrell in 2006 for $9 million.

Source: Architectural Digest



Over the next 15 years, DeGeneres continued to spend at least $145 million flipping houses, most of which were purchased with wife Portia de Rossi.

Source: Business Insider



That includes the estate where Kim Kardashian married Kris Humphries, a 26-acre horse ranch, a Malibu beach house previously owned by Brad Pitt, and a 9,200-square-foot "compound."

Source: Business Insider



She even bought one Hollywood Hills house twice. She first sold it in 2007 for $10 million, buying it back again for $8.75 million in 2014, and selling it again two years later for $9.9 million.

Source: Mansion Global



She also happened to rent this property to Nick Jonas, as discussed during an episode of "The Ellen DeGeneres Show."

Source: Business InsiderMansion Global



In 2019, she and de Rossi sold three properties for over $45 million while purchasing two others — mansions in Montecito and Beverly Hills for $27 million and $45 million, respectively.

Source: Architectural Digest



DeGeneres told The TODAY Show in 2018 that she grew up in apartments without a lot of money, which sparked her real estate zeal. "Now, I just buy as many houses as I can."

Source: The TODAY Show



When not at one of their many houses, DeGeneres and de Rossi travel. They've vacationed everywhere from Capri, Italy, to London, where they attended the Wimbledon Tennis Championships.

Source: CNN, E Online



For DeGeneres' birthday, they traveled to Africa, where they visited Rwanda, Kenya, and Tanzania, among other countries.

Source: ET Online



DeGeneres prefers a healthy lifestyle. She reportedly begins her days with yoga and has said she tries to "eat only real food."

Source: Redbook



She avoids sugar and is a huge fan of vegan, often eating at vegan LA places Café Gratitude, Real Food Daily, and Sweet Lady Jane, according to her FourSquare.

Source: FourSquare, Redbook



DeGeneres also sees an astrologer, who predicted she would become more famous and rich when she turned 45 — the age DeGeneres was when she started her talk show.

Source: Hollywood.com



DeGeneres has quite the car collection to get to her favorite LA spots. She has a taste for speedy sports cars, seen driving everything from a Porsche to a Ferrari.

Source: Hot Cars



She's also gifted de Rossi cars, like a $160,000 Land Rover Defender and, more recently, a silver Lamborghini.

Source: OK! Magazine



In an interview, DeGeneres said she spoils her wife with gifts "almost daily, if not monthly," bringing her home everything from dresses to jewels.

Source: OK! Magazine



DeGeneres also spoils her pets. She and de Rossi have four dogs and three cats at home.

Source: MSN



But DeGeneres also spends on those outside her family. Known for her sponsored giveaways and for pushing fundraisers, she's also made personal donations with de Rossi.

Source: She Knows



In 2018, they donated more than $14,500 in gift cards and appliances to Redlands Fire following devastating California wildfires.

Source: She Knows



DeGeneres also sent a $125,000 gift to help rebuild a Louisiana middle school after severe flooding.

Source: She Knows



That's not to mention her advocacy for animal rights. In 2016, Barack Obama awarded the Presidential Medal of Freedom.

Source: Insider



Growing up poor, DeGeneres decided she wouldn't be a financial stickler if she found success. "I am always going to just get what I want, I'm going to do what I want," she once said on her show. "Because I know there is an abundance and I will always have enough."

Source: CNBC



These were the 10 most-held stocks in hedge funds last quarter (AAPL)

Mon, 02/24/2020 - 2:00pm

The fourth quarter's disclosures for large investment funds were filed by February 15. For the equities world, they offer insight into how interested the sector is in stocks as an asset overall, and which companies in particular are garnering attention. 

An analysis from Novus that aggregated 13-F filings found that hedge funds collectively hold about the same amount of stocks, by market value, as in the third quarter. And the most attractive companies across firms stayed relatively similar to favorites from the third quarter, with some names gaining ground and some losing, Novus found

There were two names that defied that continuity. First, Alibaba, which became the sixth most-held stock after previously sitting just out of the top 10 in the 11th spot, Novus found. And second, Bristol-Myers Squibb, which skyrocketed to the fifth most-held stock after not even sitting in the top 20 last quarter, Novus found. That's after Bristol-Myers acquired Celgene in a move that could transform the biopharmaceutical firm into a powerhouse, Novus said. 

From mainstays to surprises, here are the top 10 most-held stocks in the hedge fund industry.

10. American Express

Ticker: AXP

Third quarter ranking: 8

Source: Novus 



9. Coca-Cola

Ticker: KO

Third quarter ranking: 6

Source: Novus 



8. Wells Fargo

Ticker: WFC

Third quarter ranking: 4

Source: Novus 



7. Amazon

Ticker: AMZN

Third quarter ranking: 7

Source: Novus 



6. Alibaba

Ticker: BABA

Third quarter ranking: 11

Source: Novus 



5. Bristol-Myers Squibb

Ticker: BMY

Third quarter ranking: Out of top 20

Source: Novus 



4. Facebook

Ticker: FB

Third quarter ranking: 5

Source: Novus 



3. Microsoft

Ticker: MSFT

Third quarter ranking: 3

Source: Novus 



2. Bank of America

Ticker: BAC

Third quarter ranking: 2

Source: Novus 



1. Apple

Ticker: AAPL 

Third quarter ranking: 1

Source: Novus 



Victoria's Secret is plotting a major turnaround as a private company. Here's what went wrong with America's lingerie darling.

Mon, 02/24/2020 - 1:53pm

  • Victoria's Secret is preparing itself for a major turnaround after several years of sliding sales.
  • On Thursday, its parent company L Brands said it would be selling a 55% stake in the lingerie retailer to private-equity firm Sycamore Partners. Under the terms of the deal, Victoria's Secret will go private. 
  • In its heyday in the mid-1990s to mid-2000s Victoria's Secret was considered America's lingerie sweetheart, and it had a powerful role in defining what "sexy" is in the modern day.
  • But a series of product misses and a reticence to update its brand image, among other issues, have taken their toll on sales in recent years.  
  • Here's what went wrong with the brand. 
  • Visit Business Insider's homepage for more stories.

Victoria's Secret is preparing for a major turnaround as a private company under new leadership after years of declining sales and ongoing criticism over its brand image. 

On Thursday, its parent company, L Brands, announced that it would be selling a majority share in the company to private-equity firm Sycamore Partners, which has a history of turning around struggling retailers. 

L Brands founder Les Wexner simultaneously announced his resignation from his long-held role as the company's CEO, though he will stay on the L Brands board of directors as chair emeritus.

In a press release announcing the news, Wexner said that turning Victoria's Secret into a privately held company would be "the best path to restoring these businesses [Victoria's Secret Lingerie, Victoria's Secret Beauty, and Pink] to their historic levels of profitability and growth."

He added that Sycamore, which has acquired a 55% stake in Victoria's Secret, "has deep experience in the retail industry and a superior track record of success" and "will bring a fresh perspective and greater focus to the business."

Wexner's resignation and the news of these changes at Victoria's Secret follow several tumultuous years at the company and its gradual fall from being considered America's lingerie darling. Here's what went wrong. 

Overtly sexualized ads, controversial comments from executives, and sliding sales

Four years ago, Victoria's Secret was the toast of Wall Street. The lingerie giant was on a four-year run of record sales growth under the leadership of longtime CEO Sharen Turney while other mall-based stores were spiraling toward a meltdown

But in 2016, the tide began to turn. Turney abruptly left the company, and Wexner replaced her as interim CEO.

Former executives who held longtime positions at Victoria's Secret previously told Business Insider that Wexner, who hadn't previously been involved in the day-to-day running of the brand, suddenly became a formidable force. These executives wished to remain anonymous in order to speak frankly about their time there, but their identities were verified by Business Insider. They said Wexner made a series of quick and fast changes: killing the catalog and swim and apparel categories to focus solely on lingerie, the core part of the business.

"The biggest mistake [Wexner] ever made was getting rid of Sharen. The stock just tanked," a former employee who worked in a senior management role at Victoria's Secret for over a decade and was laid off told Business Insider. 

"Everything started to crash," another former executive who worked at Victoria's Secret's New York office for nine years and was laid off in mid-2017 told Business Insider. "It was the beginning of the end."

When Business Insider reached out to L Brands for comment on this story and asked whether the company felt it had made mistakes over the years, a spokesperson pointed to the company's investor relations website and presentations discussing its quarterly results and sales issues throughout 2019.

Between 2016 and 2018, sales had begun to falter. Victoria's Secret was slow to adjust to a shift from padded and push-up bras toward bralettes and sports bras, missing out on a major fashion trend. Increasingly, more body-positive brands such as Aerie, ThirdLove, and Lively started to crop up and lure away shoppers. 

Victoria's Secret's US market share dropped from 33% to 24% between 2016 and 2018. And around the same time, the brand started to encounter product issues as shoppers complained that the quality of the lingerie had slipped

Things came to a head in 2018 as the #MeToo movement progressed and Victoria's Secret's marketing and brand image were increasingly criticized as oversexualized and out-of-date.

Teen-centric brand Pink, which as one of Victoria's Secret's lifelines had previously reported strong sales growth, started to be impacted by the oversexualized ads in stores. 

"It's basically pornography," one shopper Jessie Shealy wrote on Victoria's Secret's Facebook page in February 2018, referring to the photos on display in her local store in South Carolina.

And analysts became more critical of the brand for the level of promotions in its stores, highlighting them as evidence that the company was struggling. 

At the end of 2018, L Brands came under intense scrutiny after its chief marketing officer Ed Razek, who was also one of the company's longest-standing employees, made controversial comments about transgender and plus-size models in an interview with Vogue. 

Razek said that he didn't think the company's annual fashion show should feature "transsexuals" because the show is a "fantasy." The interview went viral almost instantly, which led to Razek making a formal apology; he stepped down from the company just under a year later.

In March 2019, L Brands shareholder Barington Capital published a strongly worded public letter to Wexner, which laid out its recommendations to improve growth at the brand.

Barington CEO James A. Mitarotonda described the company's brand image as "outdated and tone-deaf" in the letter and said that it failed to align with evolving attitudes toward diversity and inclusion. He also called for a shake-up of the board.

In the period since that letter was published, Victoria's Secret has made some significant changes, adding two female directors to its board and postponing its annual fashion show. Barington Capital has since become a special advisor to L Brands.

The Epstein connection

In the background to these potentially positive changes, Wexner came under significant scrutiny in the summer of 2019 over his friendship to convicted sex offender Jeffrey Epstein.

Epstein managed Wexner's money for several years and was considered a "close friend" of Wexner's. But as the scandal unfolded, reports emerged that Epstein had used his connection to Victoria's Secret to coerce victims into sexual acts. As a result, L Brands hired an outside law firm to review its relationship with Epstein.

In early 2020, the company faced a fresh scandal after a New York Times report described a culture "of misogyny, bullying, and harassment" at Victoria's Secret, which it said was created by Razek and Wexner. 

The news of Wexner stepping down marks a significant shift for the company. He is is the longest-serving CEO of any Fortune 500 company, reaching a nearly six-decade tenure at L Brands. 

The former executives who held longtime positions at Victoria's Secret's corporate offices told Business Insider in early 2019 that with Razek and Wexner at the helm of the business, it would be difficult for any CEO of Victoria's Secret's brands to make their mark and enact real change.

"They have this antiquated idea of what sexy is," a former executive who worked at Victoria's Secret New York office for nine years said. "It's changing, we are all changing and without making the right adjustments to the product and the voice you put out there, I don't know what their future is."

But now, with Razek out of the company and Wexner out as CEO, and with new leadership in place, analysts are eagerly awaiting what is it come. 

Sycamore "will bring new thinking and ultimately a new positioning for the brand," Neil Saunders, managing director of GlobalData Retail, said in a note to clients on Thursday.

"We expect this to be more authentic, less sexualized, and more attuned to the way most consumers now think," he said. 

SEE ALSO: Former employees reveal what the billionaire head of Victoria's Secret is like as a boss as he faces backlash over his ties to Jeffrey Epstein

Join the conversation about this story »

NOW WATCH: Rare Italian white truffles cost over $4,000 per kilo — here's why real truffles are so expensive

Latest fintech industry trends, technologies and research from our ecosystem report

Mon, 02/24/2020 - 2:03am

This is a preview of a research report from Business Insider Intelligence,  Business Insider's premium research service. To learn more about Business Insider Intelligence, click here.

In recent years, we've seen a ballooning of activity in fintech — an expansive term applied to technology-driven disruptions in financial services. And 2018 has been no different, with fintechs' staggering influence on the market evidenced by record funding levels for the industry — by Q3 2018, overall funding was already up 82% from 2017’s total figure, according to CB Insights.

Additionally, this year marked a watershed moment for the industry, with the once clear distinction between fintechs and financial services proper now blurred significantly. Virtually every incumbent financial institution (FI) is now looking inward and engaging in an innovation drive, spurred on by competition from fintechs. As such, incumbents are now actively investing in, acquiring, and collaborating with their fintech rivals.

In this report, Business Insider Intelligence details recent developments in fintech funding and regulation that are defining the environment these startups operate in. We also examine the business model changes being employed among different categories of fintechs as they strive to embed themselves further in mainstream finance and prove sustainability. Finally, we consider which elements of the fintech industry are rapidly rubbing off on incumbent financial services providers, and what the future of fintech will look like.

The companies mentioned in this report are: Funding Circle, GreenSky, Transferwise, Ant Financial, Nubank, Cellulant, Oscar Health, Stripe, One97, UiPath, LianLian Pay, Wacai.com, Gusto, Toast, PingPong, Flywire, Deposit Solutions, Root, Robinhood, Atom, N26, Revolut, OneConnect, PolicyBazaar, WeCash, Zurich, OneDegree, Dinghy, Vouch Insurance, Laka, Cleo, Ernit, Monzo, Moneybox, Bud, Tandem, Starling, Varo Money, Square, ING, Chase, AmEx, Amazon, Monese, Betterment, Tiller Investments, West Hill Capital, Square, Ameritrade, JPMorgan, eToro, Lendy, OnDeck, Ripple, Quorom, Chain, Coinbase, Fidelity, Samsung Pay, Google Pay, Apple Pay, Bank of America, TransferGo, Klarna, Western Union, Veriff, Royal Bank of Scotland, Royal Bank of Canada, Facebook, ThreatMetrix, Relx, Entersekt, BNP Paribas, Deutsche Bank, Gemalto, Lloyd's of London, Kingdom Trust, Aviva, Symbility LINK, eTrade, Allianz, AXA, Broadridge, TD Bank, First Republic Bank, BBVA Compass, Capital One, Silicon Valley Bank, Credit Suisse, Ally, Goldman Sachs.

Here are some of the key takeaways from the report:

  • Fintech funding has already reached new highs globally in 2018, with overall funding hitting $32.6 billion at the end of Q3.
  • Some new regions, including South America and Africa, are emerging on the fintech scene.
  • We've seen considerable scaling in older corners of the fintech ecosystem, including among neobanks and alt lenders.
  • Some fintechs, including a number of insurtechs, have dipped into new markets to escape heightened competition.
  • Emergent areas like blockchain and distributed ledger technology (DLT), as well as digital identity, are gaining traction.
  • Many incumbents are undertaking business transformations that aim to reimagine everything from products and services to front-end systems and back-end processes.

 In full, the report:

  • Details the funding and regulatory landscape in the US, Europe, and Asia.
  • Gives an overview into a number of fintech segments and how they've changed over the past year.
  • Discusses how incumbents are reacting to fintechs in order to stay relevant in the changing financial services sector.
  • Evaluates what the future of fintech will look like and what trends to look out for in the coming year.
Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to: This report and more than 250 other expertly researched reports Access to all future reports and daily newsletters Forecasts of new and emerging technologies in your industry And more! Learn More

Purchase & download the full report from our research store

 

SEE ALSO: How the largest US financial institutions rank on offering the mobile banking features customers value most

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