Meet the Fintech Using Behavioral Economics and AI to Help Users Save Their First $2,000

A 2016 survey conducted by the Federal Reserve asked respondents how they would pay for an unexpected $400 expense—like a trip to the emergency room or a broken phone. Nearly half of respondents said they would either have to borrow or sell something, or they would be unable to cover the $400 expense entirely.

Using behavioral economics and artificial intelligence, MoneyLion is arming people who couldn’t traditionally access financial advice with personalized advice and tools to help them grow their wealth.

With MoneyLion’s mobile app, users can connect their personal checking accounts to track their spending, get free credit monitoring, and receive personalized advice based on their spending patterns and credit profile. With over one and a half million users, MoneyLion says is has serviced over 250,000 loans to date.

With the launch of MoneyLion Plus, a subscription service running consumers $29 a month, MoneyLion says it wants to help people save their first $2,000. For every day a customer logs into the app, MoneyLion will give them back $1, rewarding them for healthy financial behavior.

If a customer succeeds in checking their finances every day for a month, they could even come out one or two dollars ahead.

By incentivizing consumers to review their finances more often, MoneyLion believes consumers will make more conscious decisions about daily spending. Tim Hong, MoneyLion’s Chief Marketing Officer, said the MoneyLion app also uses artificial intelligence to give members personalized daily budgeting tips whenever they log in.

“The reality is, if you have $500 in savings, you’re not getting access to a personal advisor that can really walk you through on a daily basis or monthly basis, what kinds of things you should be doing,” he told Fintech Unltd. Using technology, Hong said MoneyLion is able to draw out insights on spending patterns and credit profiles to tell customers, ‘Hey, here’s where you could be saving money, or here’s where you’re getting fees. And here’s what you can do to improve.’

The subscription service includes guided savings, where MoneyLion withdraws $50 or more from a consumer’s checking account and invests it in a personalized diversified portfolio.

“At the end of the day, the best way to save money is to set aside a little bit of your paycheck each time you get it,” Hong said. “So whether you get paid once a week or once a month or anything in between, we’ll make withdrawals and automated savings on those dates so that you set aside a little bit every time you get paid into what is effectively a nest egg.”

The MoneyLion Plus program also offers users access to lines of credit with 5.99% APR or less, regardless of credit score. This means when members do run into a $400 setback or other unexpected expense, they won’t have to deplete the savings they’ve built up.

MoneyLion Plus wants to make saving money “as easy as opening an app.”

Among beta testers of the subscription MoneyLion Plus service, Hong said they are seeing 15+ days of engagement per month.

MoneyLion customers already use the app to check their credit scores an average of 3.9 times a month. While MoneyLion incentivizes and rewards its customers to raise their credit scores, it doesn’t use the credit score to determine creditworthiness for loans. Instead, MoneyLion looks at user employment, income, and verifies that they are who they say they are.

“The borrowers that enroll in free credit monitoring are actually 28 percent less likely to default,” Hong said. “So there’s something beyond the credit score, there’s something beyond simply your FICO score… that really encapsulates and motivates good financial behavior.”

The MoneyLion Plus service will roll out in-app in the coming weeks.

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Cadence is a fintech reporter and writer at Fintech Unltd, where she covers the changing landscape of financial technologies. Previously, Cadence interned at Psychology Today, Business Insider and the Wisconsin State Journal. Cadence is interested in how science and technology intersect with power and culture and is curious about the world we are creating for tomorrow, consciously or not. She graduated from the University of Wisconsin–Madison in 2017 with degrees in Journalism and Chinese. Send tips and story ideas to Cadence at [email protected] You can also follow her on Twitter @cadencebambenek.