Credit Karma acquires personal finance coach Penny to create its first chatbot

Steven Loeb · March 15, 2018 · Short URL:

Penny's conversational interface will be integrated into Credit Karma's platform

Chatbots have become so prolific in recent years, in companies both large and small, that it's almost a surprise when you come across a major platform that hasn't integrated them yet. They are popping up in just about every vertical, from healthcare to education.

Now that includes personal finance as well, as the latest company to jump on the chatbot train is Credit Karma, which has acquired personal finance coach Penny, a company that uses a chatbot interface to have conversations with its users to help them make better financial decisions.

No financial terms of the deal were dicsloed but given that Penny, which was founded in 2015, had only raised $1.2 million in funding, this was likely a smaller deal for Credit Karma.

Penny revealed in an FAQ that, after March 14, all of its users are being given access to premium features for free, courtesy of Credit Karma, until the app shuts down for good on June 1. Going forward, while the Penny name will be dropped, the company's technology will be integrated into the Credit Karma platform.

Five members of the Penny team will be coming to work at Credit Karma, including founders Alex Quach and Mitchell Lee, to working on the integration of the technology onto the Credit Karma app and website. 

In an interview with VatorNews, Anish Acharya, VP of Product Management at Credit Karma, explained why Penny, and its technology, are a good fit for the company. 

He and Nikhyl Singhal, the CPO of Credit Karma, first met Quach and Lee around two years ago, Acharya told me, where they quickly developed a relationship centered around their ideas around the personal finance space. 

"We were just sort of talking about our respective hypotheses for where the market was going and how to help Americans, and folks worldwide, with their money. It was very much an ideation, founder to founder relationship, and, over time, as we got to know each other as we realized that a lot of the work that we were trying to do was convergent, we started talking about having a different sort of relationship."

Since then, Penny's platform has grown, and it has developed a more sophisticated conversational algorithm, as well as a welcoming design, which both fit in well with that Credit Karma is during. 

“There’s a couple of things about when I see they’ve built that I love. First is something we all know intuitively but that we fail to acknowledge when we’re building a product, and that is that there’s nothing much more emotional than money. Even though we have very functional conversations about it, whether it’s in Credit Karma or all the interactions you have with your bank and other financial institutions, a lot of it is about the numbers and it loses the emotional context that often goes with money. Money is something that can make us feel good or bad, safe or unsafe, proud or not proud, and that’s something that Penny has really managed to capture in their product experience," said Acharya.

"There’s a little bit of whimsy in it, and I think that whimsy is a representation of their acknowledgment that you really need to connect with folks and acknowledge the human and emotional context to be able to have a productive conversation around money. There was a lot of insight that they had around how to have those conversations, the tone. There’s also a ton of work they did to create a sophisticated system to iterate on those conversations and very quickly learned what was resonating, what was not resonating and improve the experience."

While Credit Karma is still working with design and product leaders on how exactly Penny's technology will manifest itself on the platform, he was still able give me some examples of how the company plans to use chatbots to enhance its products going forward.

The plan is to overlay Penny's conversational platform onto the products and features that Credit Karma already offers. For example, it can be used in its credit health offering, much of which is centered around giving users factual information, such as providing them with their credit score, credit card utilization, leaving it up the members to see how those things connect. With Penny, Credit Karma can have a more sophisticated conversation that not only gives the data but also the context to help the users interpret that information.

In November, Credit Karma introduced a new auto assistant which can do things like track the value of a vehicle over time, give users recall notices, analyze their loan details to help users save through refinancing, and analyze insurance claims.  Right now, Credit Karma estimated that there is $37 billion being taken out of American's pockets through people overpaying for their vehicles. 

This is another area where giving users access to a conversational bot would greatly improve the experience, according to Acharya.

"This is actually a pretty tricky conversation to have. Sharing the context on both your loan, how or why it might be overpriced, understanding that, in this case, the loan is sold not bought, because you’re already at the dealer and you’re already excited about a car. It’s a pretty nuanced conversation, one that you and I can have in two minutes, but one that’s hard to represent in UI, so it’s a perfect place for us to plug in Penny and help facilitate," he said. 

"It’s complex, it requires nuance and knowing you went to the dealer, perhaps you overpaid on your loan, maybe that’s a conversation you’re a little uncomfortable with having with friend or family member at the dinner table, but having it with a chatbot that can still provide the same sort of context and the same conversational tone matters.

What chatbots really allow Credit Karma, to do, Acharya explained, is to develop a deeper relationship with its users, giving them better information than they are currently able to get from the platform. 

"Chatbots allow us to have conversations at a different level of detail and in the spirit of having a point of view, which is something that the app and the experience doesn’t do today. Today, Credit Karma delivers a set of facts to our members, and with the chatbot, we’ll be able to have a conversation around those facts."

Correction: Nikhyl Singhal was previously referred in this article as the CTO of Credit Karma. He is the CPO.

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