How many bonus features does it take to convince a Millennial to use a credit card? Try no fees, no interest, credit optimization, self-destructing account numbers, spending on future paychecks, customizable settings, a solid metal card, and the promise of more features updated continuously.
Because approximately two thirds of Millennials don’t own a credit card, and the banking industry is notoriously difficult to innovate in, CEO Ry Brown and Cofounder David Adelman placed a risky bet when they founded cred.ai. And yet three years later the team of “hackers, artists, scientists, and recovering bankers” has come up with the product, announced this afternoon.
The “Unicorn card,” issued by Wilmington Savings Fund Society (WSFS) and licensed by Visa, runs on a proprietary platform that can ultimately be leased. Ry Brown described it as a “banking infrastructure,” as cred.ai has satisfied the compliance standards of a bank. The team, which included several attorneys, an astrophysicist, twenty engineers, journalists, and a 3D animator, worked together to understand the ins and outs of banking. The only way to create the card, Brown tells me, was to essentially build a bank from scratch, which is why fellow co-founder and lead investor David Adelman has likened the company to Tesla.
“We approached an antiquated and rigid sector as if limitations didn’t exist, with the conviction that we could use hard work and creativity to rebuild it into something fundamentally better,” says Adelman. “Of the forty different ventures [I’ve invested in during my career] this is my most exciting one yet.”
With the exception of the 2019 Apple Card, there has been very little innovation in the credit card industry. Cred.ai founders looked instead to financial technology companies such as Plaid, PayPal, and Venmo for inspiration. “The reason every bank and fintech card offers such sparse, identical features is because they are basically white-labeling the same stock platforms with a different logo,” says chief banking officer Lauren Dussault.
The card comes with capabilities that are complete game-changers to the banking industry. “Stealth mode” allows the card user to create a shadow account, with a completely different set of identification numbers, that can be used for transactions that could potentially be risky, and then deleted. “Friend or Foe” allows one to trust or restrict transactions on an individual merchant level. “Check Please” allows one to authorize a transaction in advance and thus avoid a potential card decline. There are no fees, no interest, and no payments. In fact, the card doesn’t cost anything to users.
When it comes to helping cardholders build credit, the infrastructure is designed around credit optimization. The algorithms are secret, but Ry Brown tells me the focus is on maximizing credit utilization for card-users. The whole process is automated, ensuring that users won’t have to worry about managing their spending to optimize credit, because the cred.ai’s back-end will do it for them. The interface is designed to generate “financial insight and control for a younger generation,” says Brown.
The card’s activity can ultimately be translated to a FICO credit score. I asked Ry Brown about the racist history of lending and credit score generation, to which he replied that credit has indeed been a tool for suppression, and this product is trying to change the ecosystem. In the words of President and Cofounder Dylan Brown, “our mission [is] to build a premium product for all people.”