Financial Wellness Tools Propel Fintech Deeper into Banking Space

MoneyLion's CEO reveals details of the challenger bank's focus on middle Americans impacted by the pandemic. The company's upgraded mobile platform integrates a new demand deposit account and debit card with its 'everyman' investing product, 'tip-based' instant loans and AI-powered financial insights.

It may seem unlikely for a challenger bank with six-million-plus members to be described as operating “below the radar,” but that description would fit MoneyLion. The fintech, launched in 2013, operates in the shadow of Chime, the dominant U.S. challenger bank with eight million accounts and a whopping $5.8 billion valuation. Even the much smaller Varo Money gets more attention, thanks to its successful pursuit of the first-ever national banking charter awarded to a fintech.

But while Varo was getting its charter, MoneyLion quietly launched a new mobile banking product using a new banking partner, a new card network and its own distinctive brand name: RoarMoney.

MoneyLion’s focus in its early years was on its low-cost automated investing tool, but its mobile banking product, even before the upgrade, has become its most popular feature, according to CEO Dee Choubey.

That fact, plus its seamless integration between investing, banking, lending and financial wellness, all on one mobile app, makes the company noteworthy as a retail banking competitor.

With the RoarMoney launch MoneyLion now positions itself as the bank for “hard-working Americans,” many of whom are facing financial challenges due to the impact of COVID-19. “Challenged” doesn’t equate to “stressed,” Choubey clarifies. He says the fintech’s core market is “the middle-income American household.” The MoneyLion platform allows consumers to easily gauge their financial situation through a digital tool called “Financial Heartbeat,” with the ability to have extra funds placed automatically into investments or savings.

“We think the intersection of RoarMoney, our investment account and — in the months when a customer needs to smooth income — our lending products, work really well together,” says Choubey. “The funds move seamlessly from one to the other.”

Features of the RoarMoney Banking Account

RoarMoney involves a partnership between MoneyLion and two key players: Metabank, N.A., and Mastercard. The South Dakota-based Metabank holds the insured deposits and issues the MoneyLion Debit Mastercard. RoarMoney is an upgrade of an existing mobile banking product MoneyLion introduced in 2018, which had Lincoln Savings Bank as its banking partner.

“The upgrade includes everything you would expect in the post-COVID world,” Choubey tells The Financial Brand. That means contactless payments both at the point of sale and through Apple or Google mobile wallets and smartwatches. Other pandemic-related features include making paychecks available up to two days early and MoneyLion’s Instacash product — basically a free overdraft up to $250.

“We want to stick to what we’re really good at … the tip-of-the-spear parts of the business where we can add incremental value to our users.”
— Dee Choubey, MoneyLion

RoarMoney users automatically get a virtual debit card the moment they sign up. The physical debit card is a Mastercard Tap & Go contactless card that comes with features including a price protection plan that will refund up to $250 if a user finds a lower price for an item purchased with the card within 90 days. MoneyLion members also earn cashback rewards every time they spend $10 or more using the card. In fact, they can earn back the entire amount of the purchase (up to $120) with a clever MoneyLion option called “Shake ‘N’ Bank.”

To see what amount they get back, the user literally shakes their phone and an amount of anywhere from one cent to $120 randomly shows up. The reward is invested into the consumer’s MoneyLion investment account.

RoarMoney is priced at $1 a month with no account minimums and no fees for standard service. The MoneyLion investment account does have fees for withdrawals and has an administrative fee of $1 per quarter, according to a company statement.

The company does earn interest on some of its loan products. However, in another unusual twist on pricing, MoneyLion doesn’t charge anything — interest or fee — on its Instacash short-term loans, which Choubey calls “our take on overdrafts.” Instead they ask the consumer to leave a voluntary tip. The software nudges the user with the message, “Look, if this helps you, help the MoneyLion community back and leave a tip,” according to Choubey.

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The Power of Seamless Software

Choubey describes the software that powers MoneyLion and RoarMoney as part bank account, part wealth management platform. “We’re a bank, a broker/dealer, a registered investment advisor, and a lender,” the CEO states.

“The way we acquire our customers from an integration perspective is incredibly powerful,” he continues. “The software knows how much I’m transacting in my bank account and it uses that data to alert me or suggest different products on the wealth management side, such as when it’s optimal for me to move more money from my checking account into my investment account.”

MoneyLion has an auto invest feature, as well. “Our strategy is to make it as easy as possible for our consumers to get the benefit of compounding interest,” says Choubey. For many Americans, low-cost auto investing into a managed portfolio will be the most efficient way to get access to the stock market, he maintains. MoneyLion members can start by investing as little as $5 and go all the way up to thousands of dollars.

Originally auto invest, for the consumers who chose it, would automatically withdraw money from a MoneyLion member’s checking account (at any institution) and invest part of it and take part as a fee. Many people liked the mandatory arrangement, says Choubey, but a portion of the members said, “Hey, we want to decide that.” The model is now more flexible. “Instead of making it a mandatory contribution,” Choubey states, “we allow the user to elect how much they’d like to voluntarily put into their accounts.”

Focus on Financial Wellness

The largest component of MoneyLion users are age 34 to 42, Choubey notes — older Millennials and younger Gen Xers. In addition to prompting users to invest or save, the MoneyLion app uses artificial intelligence and machine learning to provide users with a score of their financial life. Called Financial Heartbeat, the tool was launched in late 2019, just prior to the pandemic’s massive impact on the economy.

“We call it the fitness tracker for your finances,” says Choubey. Using a 1 to 10 score Financial Heartbeat measures four different categories of a person’s finances and aggregates them into a score. The four factors, as described on the MoneyLion website, are:

  • Save — how well you are prepared for expenses, both unexpected and planned.
  • Spend — how well you keep spending in line with your income.
  • Shield — how well you understand and organize your insurance needs and coverage.
  • Score — encompasses credit score and overall credit health in terms of utilization and interest.

In addition to the above factors, the Financial Heartbeat rating also incorporates extra points awarded by the app for “easy and big wins and positive financial steps.”

The AI software that powers Heartbeat uses data drawn from the entire MoneyLion community to analyze a person’s financial health, according to Choubey. “There is a lot of behavioral economics and nudges built into the software,” he says. “As our user base grows, so does the power of those insights on a real-time basis.”

Partner Bank Model or Charter?

Choubey says that MoneyLion had a great relationship with Lincoln Savings Bank, its original partner bank. However, he points out that Metabank invested in MoneyLion’s Series C funding round in 2019 and also has made available certain product feature-sets and capabilities that others weren’t able to provide. “Really the ability to support how quickly we’re innovating on behalf of the consumer was the primary driver for shifting,” he adds. Metabank is a big prepaid card issuer.

Choubey would not disclose the number of banking accounts that were maintained at Lincoln Savings, but said the transfer to Metabank is easy to do within the MoneyLion app.

A recent spate of applications for banking charters from SoFi, Square, Monzo — along with Varo Money’s new charter — begs the question of whether MoneyLion will follow that route.

Choubey responded at length on the subject:

“Financial services is complicated,” the CEO states. “As a young company, we want to stick to what we’re really good at, which is creating beautiful user experiences and journeys — the tip-of-the-spear parts of the business where we can add incremental value to our users. On the regulatory compliance side, and from a program management perspective, Metabank and the other banks do a really good job.

“I’m not saying we’ll never look at a charter. But for now, it makes a lot of sense to partner. So for the foreseeable future we’ll [follow] that strategy.”

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