In MoneyLion’s Quest to Become a Financial “Super App”
MoneyLion, an 8-year-old New York neobank, wants to become a destination for all of its clients’ financial needs, including banking, loans and investments.
It’s a strategy that resembles competing proposals from other fintechs, but founder and CEO Dee Choubey said what sets MoneyLion apart is its approach to serving clients across the spectrum of financial needs, from the times. “excess” – including banking, cash management and e-commerce. features – when needed, with offers like its Instacash cash advance product, as well as personal and builder loans.
“We’re building a data-driven ‘super app’ for hard-working Americans,” Choubey said. “80% of Americans oscillate between periods of excess and periods of need, and it is never constant for them. Our ability to use our proprietary technology stack, our data advantage, and our intimate knowledge of our user base to create products for these inflection points really sets us apart. “
MoneyLion started out as a personal finance and lending platform. A few years after starting its operations, it added digital banking and investing. He plans to roll out the crypto this year, and a “Buy now, pay later “ the offer is in beta. The company announcement in February that it will go public through a merger with special purpose acquisition company Fusion Acquisition Corp. in a $ 2.4 billion deal. MoneyLion also acquired financial planning technology company Wealth Technologies in March, a move that Choubey says will help improve its ability to deliver personalized information.
“[Their technology] allows us to take details about the consumer including age, income, retirement date, spending capabilities and provide very personalized advice term by term, ”said Choubey. The company will continue to integrate its capabilities into the MoneyLion platform.
Subscription service menu
MoneyLion is positioned as a financial services response to Costco or Amazon. But customers can choose to subscribe à la carte products.
The RoarMoney checking account, offered in partnership with MetaBank, is billed at $ 1 per month, while MoneyLion’s robo-advisor, which he calls Managed Investing, costs $ 1 per month. Instacash, or MoneyLion’s cash advance product, has no monthly fees, 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 builder loans (annual percentage rates range from 5.99% to 29.99%). %), banking and investment.
“Once we have integrated the consumer, once we have obtained their pay [direct deposit], at each different inflection point, they will need different products, ”said Choubey.
The company added a product market this year, which includes offerings from Nationwide Insurance, and Choubey said the company is open to adding non-financial products.
“From a non-financial product perspective, you know, our ultimate vision is that MoneyLion is a daily destination, and this daily destination is a mix, of course, of financial transactions, but also of how to live a better life.” , said Choubey.
Membership and cash advance products
As MoneyLion seeks to reach a wide range of customers, its loan offerings have gone under regulator control. The company disclosed in a June regulation deposit civil inquiries over three consecutive years – from 2019 to 2021 – regarding its membership model and compliance with the Military Loans Act. The company has also received investigative subpoenas from the Securities and Exchange Commission regarding a subsidiary, Invest in America Credit Fund 1 LLC, through which MoneyLion’s credit and payday loan products are funded. MoneyLion’s loan products are also the subject of investigation and investigation by financial supervisors in the states of California, Minnesota, and Colorado.
Choubey said the company is cooperating with regulators and is on a “very solid footing” with them.
“We operate in a highly regulated environment,” he said. “There are a lot of regulatory bodies that we report to and as we innovate and create new products they will often have questions. It is no different from any regulated institution. “
Since MoneyLion’s Credit Builders Membership Program takes a monthly fee in addition to the loan’s APRs, some analysts argue this could mean a heavier fee load for consumers compared to similar offerings in the market. .
“Many banks, credit unions and some fintech startups offer credit construction loans for total costs as low as $ 60 on a $ 1,000 12 month loan, or about 15% of total costs for a similar credit loan from MoneyLion’s, ”said Jason Mikula, a fintech consultant.
Meanwhile, offering Instacash cash advances also presents potential challenges, including costs consumers could accumulate in the form of voluntary tips, instant transfer fees, and the risk that automated refunds could incur fees. insufficient funds or overdraft, Mikula said. (SilverLion, according to its website, said the company plans Instacash repayments based on its analysis of the customer’s cash flow patterns. Customers can also choose to receive funds within 24-48 hours without paying any additional fees.)
Choubey said customers have the option to recoup the full monthly subscription fee based on frequent engagement with the app.
“It’s been one of our hallmarks for a long time – the way we use engagement to educate and reduce the cost of financial products,” he said.
Choubey said Instacash is designed to meet the evolving needs of customers with volatile revenues.
“There are several delivery models [earned-wage access] and the conversations we have with regulators are actually very thoughtful and productive, ”he said.
Silver Lion reported its net turnover increased by 98% during the year 2021 first quarter, reaching $ 33.2 million, up from $ 16.8 million a year earlier. Choubey said the company generates income from transaction fees (including subscriptions), interest on loans (which accounts for 5% of the company’s revenue), “advice and affiliates” and exchanges. MoneyLion said it has 1.8 million customers.
The path to differentiation
Faced with the competition, MoneyLion sees its marketplace model as a differentiator.
“Our overall vision is to be a daily destination,” said Choubey. “We truly transcend financial transactions to transactions of life [and that] allows us over time to move from a single product platform to an aggregator. “
Stephen Greer, senior analyst at Celent, suggests that MoneyLion, like many neobanks, is on the right track to diversify its revenue streams beyond interchange fees.
“[That’s] pretty important because they’re looking for deposit accounts that have a low enough margin and cheap enough, “he said.” I wonder, with some of these neobanks, when do they hit a limit and do they then have to become a bank to really start growing. “
He noted that MoneyLion, like many banks and fintech startups, likely aims to play an advisory role to its clients as a tool to increase portfolio share. But standing out in a sea of low-cost competition can still be a challenge for the company as it evolves, Mikula said.
“As a non-banking fintech, [MoneyLion] partners with MetaBank to offer some of its products, limiting its ability to differentiate itself, ”he said. “MoneyLion has little competitive advantage over other ‘neo-bank’ products, and its cash and credit advance products are arguably worse for consumers – less transparent, more expensive – than similar features of Chime or Varo. . “