MoneyLion is a five-year-old private fintech company that offers lending, financial advisory, and investment services to consumers. Founded in 2013, MoneyLion's target market is 70% of American consumers, a group that has less than $2,000 in savings on average. The company's goal is to optimize consumers' money management and savings while boosting their credit. Over 93% of MoneyLion Plus Members are first-time investors, per a company report published in March 2018.
The company makes money through its loan business, lead generation from users on its site, and monthly subscription service. Individuals who use MoneyLion's services begin as visitors, choosing to either use the platform for free or to buy its premium consumer services via a premium membership and loan applications.
The company was formed in New York City by a team of tech specialists and financiers, who developed the firm's analytics and machine-learning technology to offer tailored advice to individuals based on their spending patterns. MoneyLion also offers consumers access to small loans to help them manage fluctuating monthly income and expenses.
Customers receive points through a reward program for doing things like connecting a bank account or keeping their credit utilization low. MoneyLion's system mimics point-earning credit card programs like Chase Ultimate Rewards or Amex Membership Rewards.
Founders and Backers
MoneyLion is headed by co-founder and CEO Diwakar Choubey, who previously worked on Wall Street, where he held senior positions at firms including Goldman Sachs, Citadel, and Barclays Capital. Chief Information Officer Pratyush Tiwari, and Chief Technology Officer Chee Mun Foong are also co-founders. In a push to expand consumer banking services via mobile phone, MoneyLion hired financial industry veteran, Jon Stevenson, formerly the head of alternative investment at Stifel Financial as the head of its banking and wealth management division.
The company operates out of four offices worldwide, including its New York City headquarters, San Francisco, Salt Lake City, and Kuala Lumpur, Malaysia.
The firm has raised five rounds of funding totaling $269.5 million, with the last Series C round bringing in $160 million in July 2019, for a valuation nearing $1 billion. Among its leading investors are Edison Partners and Greenspring Associates. Other backers include Fintech Collective, Grupo Sura, and Sanhua Capital.
Those funds have helped MoneyLion compete with big and small fintech competitors. MoneyLion's profit and its estimated market value are both undisclosed.
The platform has a 4.6-star rating on TrustPilot, a popular consumer review website. The negative reviews criticize the company for poor customer service, slower-than-promised fund transfers, and other account issues. The platform's growth, however, has been rapid despite these complaints.
Loans Becoming a Key Driver
MoneyLion generates revenue through its loan business, where the company has amassed over 4 million members since launching in 2013. The company has managed to generate various accolades, including Best Personal Loan App, according to PYMNTS.com.
In addition to providing tools to track spending, savings, and manage credit, the firm also offers lower-cost borrowing and investment services through its MoneyLion Plus subscription. This service offers loans up to $500 at a 5.99% annual percentage rate or lower without a credit check, payable over 12 months. The firm is able to offer low rates by using brokerage accounts as collateral and the loans can be funded within 15 seconds of an application, according to MoneyLion.
MoneyLion Plus Subscription Service
Launched in December 2017, MoneyLion Plus brings investing, borrowing, and checking accounts into a single, subscription-based, membership. MoneyLion automatically withdraws $79 from a consumer's account per month, depositing $50 into their investment accounts and taking $29 as a monthly fee. Users get $1 cashback for every daily login, meaning that users who remember to sign on every day and scroll through a few screens essentially get the service for free. Its managed investment account moves saved money into a portfolio of ETFs and does not charge management fees.
Lead Generation Service
The startup also gets revenue from its lead generation business, by which it recommends other financial service offerings to consumers who may benefit from them.
Partners include related businesses like credit monitoring firms. MoneyLion also has sponsorship deals with organizations such as NASCAR. Its partnership with NASCAR provided cash back to users who made purchases on NASCAR tickets and purchases at its tracks.
MoneyLion heads off against a growing number of fintech platforms catering to consumers, including digital finance companies LearnVest, Betterment, and Intuit. Meanwhile, as new tech startups shake up the traditional banking industry, older players are going on the defensive.
For example, in August, JPMorgan Chase launched a no-fee app called "You Invest," targeting Millennial customers who trade on their mobile devices. Other established industry leaders have followed similar fashion, with companies like Fidelity Investments and Vanguard Group cutting some of their fees to zero, per the New York Business Journal.