The way we manage our money is changing: We can buy car insurance based on the miles we drive, withdraw money from our paycheck before payday rolls around and apply only for credit cards and loans we know we are likely to be approved for.
The personal finance start-ups on our annual Fintech 50 list -- like Metromile, Earnin and Credit Karma -- are harnessing data, cutting-edge technology and sheer willpower to overcome the traditional confines of the financial system. They're experimenting with new business models in an attempt to align their incentives with ours. They're deploying behavioral science to help us act smarter around our money.
The result? It's easier (and cheaper) than ever to save, spend, invest, find good rates on loans and insure our belongings.
Here are five of the country's most innovative personal finance and insurance companies:
Credit Karma, San Francisco, CA
Provides consumers with free credit scores and credit monitoring, plus, as of 2017, free tax prep software and filing. Uses data on a consumer’s finances to make personalized recommendations for credit cards and loans that an applicant is likely to be approved for, collecting referral fees from lenders.
Bona fides: More than 75 million registered users
Founders: CEO Kenneth Lin, 43; CRO Nichole Mustard, 45, CTO Ryan Graciano, 36
Funding: $368.5 million from CapitalG (previously Google Capital), Tiger Global Management, Ribbit Capital, Susquehanna Growth Equity and others. Latest valuation: $3.5 billion
Threat to: FICO, credit bureaus, Intuit, H&R Block, LendingTree, NerdWallet
More on Credit Karma: Credit Karma Takes On TurboTax, H&R Block With Free Tax Filings
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Earnin, Palo Alto, CA
Mobile app, (originally known as Activehours), allows hourly workers to tap into their already earned income before payday rolls around. Cash, up to $500 per paycheck, hits a user’s bank account instantly. Users pick how much (or nothing) they want to pay the app.
Bona fides: Has signed up users from more than 50,000 companies, including Walmart, Starbucks, Best Buy and Home Depot
Founder & CEO: Ram Palaniappan, 45
Funding: $65 million from Andreessen Horowitz, Matrix Partners, Ribbit Capital, Felicis Venture, Thrive Capital and others
Threat to: Payday lenders, loan sharks, bank overdraft fees
More on Earnin: Want To Cash In On Your Paycheck Before Payday? There's An App For That
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Lemonade, New York, NY
Provides insurance to urban renters for as little as $5 a month and to homeowners for as little as $25. Customers can sign up, modify or cancel their policy on the app. Novel model, designed to cut administrative costs and disputes, lets Lemonade keep 20% of customer premiums, with the rest earmarked for claims payouts and any surplus divvied up to charities of customers’ choosing. About a third of claims are paid automatically.
Bona fides: In 2017, donated 10% of revenue to nonprofits.
Cofounders: CEO Daniel Schreiber, 46; COO Shai Wininger, 44
Funding: $180 million from Softbank, Sequoia Capital, Aleph, General Catalyst, Thrive Capital, Allianz SE and others. Latest valuation: $600 million.
Threat to: Progressive, Allstate and other traditional insurance companies
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Metromile, San Francisco, CA
Sells car insurance in seven states priced with a low, flat monthly fee, plus an additional per mile charge. Mileage is tracked by a dongle plugged into the car's diagnostic system, which also helps track details of any accident, leading to faster claims settlement. Recently began allowing consumers to schedule car repairs and rent a car without speaking to a claims representative.
Bona fides: Metromile says those who drive little can save $500 a year.
Founder and chairman: David Friedberg, 37, who founded The Climate Corp., which provides weather insurance for farmers and was sold to Monsanto for $930 million in 2013
Current CEO: Dan Preston, 32, who started at the company as chief technology officer
Funding: $205.5 million from Mark Cuban, China's Pacific Insurance, Canada's Intact Financial, New Enterprise Associates, Index Ventures and others
Threat to: Progressive, Geico, traditional auto insurers
More on Metromile: Fitbit For Your Car: Insurer Metromile Tracks Your Mileage And Bills Accordingly
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Qapital, New York, NY
With advice from famed behavioral economist Dan Ariely, prods Millennial users to save and invest more with customizable triggers e.g. save $10 if I don’t hit my 10,000 steps a day or if I skip my daily latte. Recently introduced a debit card so users can tap into savings they set aside for short-term goals, like a trip to Hawaii.
Bona fides: 390,000 users have socked away $350 million
Founders: Swedish duo George Friedman and Erik Akterin, 38 and 39, who worked together at that nation’s largest online stock brokerage, Avanza
Funding: $17.3 million from Northzone, Industrifonden, Anthemis Exponential Ventures, Rocketship VC and others
Threat to: Acorns, Digit and other savings apps
Read more:
Full list of the Fintech 50 2018
Forbes Fintech 50 2018: The Newcomers
Forbes Fintech 50 2018: The Future Of Lending
Forbes Fintech 50 2018: The Future Of Investing
Forbes Fintech 50 2018: The Future Of Payments
Forbes Fintech 50 2018: The Future Of Blockchain And Cryptocurrency
Forbes Fintech 50 2018: The Future Of Wall Street And Big Data
Forbes Fintech 50 2018: The Future Of Real Estate And Finance
