Intuit (INTU 1.62%) is a well-established software company that has made a name for itself in the financial software industry thanks to its popular products such as QuickBooks, TurboTax, and Mint. It has demonstrated a strong focus on innovation in recent years by heavily investing in bleeding-edge artificial intelligence (AI) technology, helping to cement its position as a fintech leader.
But after OpenAI released ChatGPT and showed the possibilities of generative AI, it sparked a race to leverage this technology across various industries to disrupt the balance of power in entire sectors of the economy, including financial services.
Generative AI is a type of AI that can generate text, translate languages, write creative content, and answer questions. While this new technology could level the playing field and aid competitors in threatening Intuit's position, the company will likely remain the leading player in financial services. Here's why.
Intuit is now an AI-first company
During the tenure of its previous CEO, Brad Smith, Intuit underwent a significant transformation from a traditional software manufacturer to a cloud- and mobile-focused company. The move was a massive success, with the stock up 828% between 2010 and 2020. Still, current management believes the AI era could be even more significant.
The company entered this new era when Sasan Goodarzi took the helm on Jan. 1, 2019. Goodarzi recognized the potential of AI and boldly declared at Intuit Investor Day 2019 that it would become an AI-driven expert platform.
Image source: Intuit.
Intuit has significantly increased its investment in AI since that Investor Day in 2019. It has focused on three key areas:
- Machine learning: This refers to computer systems that can learn and improve without being explicitly programmed for it. These systems use algorithms and statistical models to analyze data patterns and draw conclusions.
- Knowledge engineering: A knowledge-based system is a type of AI that captures the knowledge of human experts in a data base and then uses that information to answer questions or make recommendations.
- Natural language processing (NLP): This type of AI allows computers to comprehend and handle human language.
To bulk up its capabilities in the above areas, the company has acquired various AI-powered companies -- including Credit Karma, Imvision, and Origami Logic -- to access new AI technologies and skilled professionals. It also laid off 715 workers in 2020 while hiring 700 individuals with AI and analytics expertise to rebalance its workforce toward an AI-driven company.
Intuit's robust data and AI capabilities are foundational to the company's success as a fintech leader for consumers and small businesses.
It faces enormous competition
Intuit competes with companies serving consumers and businesses globally. Some of its most notable competitors include:
- Sage Group: A British multinational software company that offers a variety of financial software products, including accounting, payroll, and customer relationship management.
- Block: Formerly known as Square, it offers a variety of accounting solutions for small businesses.
- H&R Block: An American company providing payroll and business consulting services, consumer tax software, do-it-yourself online tax preparation, and electronic filing.
- Wave Accounting: A Canadian cloud-based accounting software company that offers a free plan for businesses for accounting and invoicing and generates revenue through optional paid money-management features.
It is even possible that giants like Meta Platforms, Amazon, and Alphabet could eventually diversify and develop competing financial services.
The above companies and others offer various features and pricing options that could make it difficult for Intuit to compete over the long term. And virtually every financial services company is now investing in generative AI -- potentially disruptive for Intuit. The technology is so revolutionary that it could even the odds for newcomers or up-and-coming companies competing with established players like Intuit.
Intuit is a pioneer in generative AI
Intuit was one of the first companies to deploy generative AI in fintech. It launched a proprietary generative AI operating system (GenOS) on its platform on June 6.
One massive advantage of GenOS is that the company trained it using the vast amount of data it has about its users, including financial transactions, tax information, and spending habits. This data is high fidelity, meaning that it is accurate, complete, and up-to-date.
According to the company's press release on GenOS:
[Intuit] has 400,000 customer and financial attributes per small business, as well as 55,000 tax and financial attributes per consumer, and connects with over 24,000 financial institutions. With more than 730 million AI-driven customer interactions per year, Intuit is generating 58 billion machine learning predictions per day. Intuit's end-to-end approach maximizes customer value with a single, unified data architecture. With this robust data set, Intuit is delivering personalized AI-driven experiences to more than 100 million consumer and small business customers, with speed at scale.
When developing effective AI products, data often separates the wheat from the chaff. The quality of the data that a company uses to train its generative AI influences the accuracy, completeness, relevance, and clarity of its responses to queries. Since many competitors do not have access to the same high-fidelity financial data as Intuit does, it has a competitive advantage in building generative AI products that are more accurate, personalized, and scalable.
All fintechs, from large companies to start-ups, will eventually have multiple generative AI products. But the quality of data used to train it will remain a crucial factor that sets companies apart.
Generative AI is still in its early stages of development. But if you had to choose a company to win the AI technology race in fintech, Intuit would be a wise option to consider.
