MoneyLion, an 8-year-old New York-based new bank, wants to become a destination for all of its clients’ financial needs, including banking, lending and investment.
It’s a strategy that’s like competing proposals from other fintech companies, but founder and CEO Dee Choubey said what sets MoneyLion apart is its approach to serving customers across a range of financial needs, from periods of “exaggeration” – through banking. , cash management and e-commerce. Features – in times of need, with offers such as Instacash cash advance product as well as personal loans and credit creation loans.
“We are building a ‘super application’ based on data for working Americans,” Choubey said. Eighty percent of Americans fluctuate between times of need and times of need and it is never fixed for them. “These turning points really set us apart.”
MoneyLion started as a personal finance and lending platform. A few years after its launch, it added digital banking and investment. Intends to release encryption this year and a “buy now, pay later“ the offer is in beta. The company was announced in February it will be listed on the stock exchange through a merger with the special purpose acquisition company Fusion Acquisition Corp. in a $ 2.4 billion deal. MoneyLion also acquired financial design firm Wealth Technologies in March, a move Choubey said would help improve its ability to provide personalized information.
“[Their technology] “It allows us to get details from the consumer, including age, income, retirement date, spending opportunities, and we provide very personalized guidance per period,” Choubey said. The company will continue to integrate its capabilities into the MoneyLion platform.
Subscription service menu
MoneyLion is placed in response to financial services at Costco or Amazon. But customers can choose Register in σε la carte based products.
The RoarMoney checking account, offered in partnership with MetaBank, costs $ 1 a month, while MoneyLion’s robo-consultant, whom it calls Managed Investing, costs $ 1 a month. Instacash, or MoneyLion cash advance product, has no monthly fee, but users pay $ 3.99 to $ 4.99 for instant access to funds. Meanwhile, MoneyLion’s Credit Builder Plus subscription offer, at $ 19.99 per month, includes access to credit institution loans (annual rates range from 5.99% to 29.99%), banking and investing.
“Once we integrate the consumer, as soon as we receive his payroll [direct deposit]”At every different turning point, different products will be needed,” Choubey said.
The company added a product market this year, which includes offers from Nationwide Insurance, and Choubey said the company is open to adding non-financial products.
“From a non-financial point of view, you know, our ultimate vision is that MoneyLion is a day-to-day destination and that the day-to-day destination is, of course, a combination of financial transactions, but also how to live a better life,” Choubey said. .
Cash subscription and deposit products
As MoneyLion seeks to reach a wider range of customers, its lending offers have been downgraded regulatory control. The company revealed in a regulatory document in June archiving requests for political inquiries in three consecutive years – 2019 to 2021 – on the membership model and its compliance with the law on military lending. The company also received inquiries from the Hellenic Capital Market Commission about a subsidiary, Invest in America Credit Fund 1 LLC, which finances MoneyLion’s credit and payroll products. MoneyLion lending products are also the subject of investigations and investigations by state financial oversight authorities from California, Minnesota and Colorado.
Choubey said the company is working with regulators and is on a “very consistent basis” with them.
“We operate in a highly regulated environment,” he said. “There are many regulators we refer to and as we innovate and build new products, they will often have questions. It is no different from any regulatory body.”
As MoneyLion’s Credit-builder membership program charges a monthly fee above the APR of the loan, some analysts argue that this could mean a greater burden on consumers compared to similar offers on the market.
“Many banks, credit unions and some fintech startups offer similar loans to create credit for a total cost as low as $ 60 on a $ 1,000 12-month loan, or about 15% of the total cost of a similar credit building loan from MoneyLion’s, “said Jason Mikula, a fintech consultant.
Meanwhile, offering an Instacash cash advance also has a number of potential challenges, including the costs that consumers may incur in the form of voluntary gratuities, direct transfer charges, and the risk of automated repayments. Mikula. (MoneyLion, according to its website, said the company plans Instacash payments based on its analysis of customer cash flow patterns. Customers can also choose to receive money in 24 to 48 hours at no extra charge.)
Choubey said customers have the opportunity to win back the full monthly subscription based on their frequent commitment to the app.
“This has been one of our hallmarks for a long time – how we use commitment to educate and reduce the cost of financial products,” he said.
Choubey said Instacash was designed to meet the evolving needs of volatile customers.
“There are many models for delivery [earned-wage access] “And the conversations we have with the regulators are actually very careful and productive,” he said.
MoneyLion mentionted Its net income increased by 98% in 2021 first quarter, reaching $ 33.2 million, compared with $ 16.8 million a year earlier. Choubey said the company generates revenue from transaction fees (including subscriptions), interest on loans (representing 5% of the company’s revenue), “consulting and subsidiaries” and exchanges. MoneyLion said it counts 1.8 million customers.
The road to differentiation
In the context of competitors, MoneyLion sees the market model as a differentiating element.
“Our overall vision is to be a daily destination,” Choubey said. “We are really moving beyond financial transactions to life transactions [and that] allows us over time from an individual product platform to eventually switch to an aggregator. “
Stephen Greer, a senior analyst at Celent, suggests that MoneyLion, like many neo-banks, is on track to diversify its sources of revenue beyond interbank commissions.
“[That’s] “It’s very important because they are looking for deposit accounts that have a fairly low profit margin and are quite cheap,” he said. “I wonder, with some of these new banks, where they reach a limit and then they have to become a bank to start really growing.”
He noted that MoneyLion, like many banks and fintech startups, is likely to play an advisory role to its clients as a tool to increase its wallet share. But standing out in a sea of low-cost competitors can still be a challenge for the company as it escalates, Mikula said.
“As a non-banking fintech, [MoneyLion] “It works with MetaBank to offer some of its products, limiting its ability to differentiate,” he said. more expensive – from similar features from Chime or Varo. “