When a company works in the customer’s best interest, both sides end up winners, MoneyLion senior vice president of marketing and product Tim Hong believes.
Mr. Hong said MoneyLion, which is a direct to consumer lender, was founded in 2013 on the belief that advancements in machine learning and artificial intelligence can help lenders better understand credit risk and broaden credit access to a greater range of consumers.
“We were founded on that notion we could go beyond the credit score, to incorporate data and behavior to incentivize repayment,” Mr.Hong explained.
Because MoneyLion is a balance sheet lender and not a marketplace one, its interests are better aligned with the customer’s, Mr. Hong said.
And it’s not a relationship MoneyLion takes for granted either. They offer tools such as free credit monitoring, expense tracking and rewards for positive behaviors like on-time payments.
“By offering these tools, all of these things really help our borrowers improve their financial health,” Mr. Hong said.
Most of MoneyLion’s more than one million customers are not loan takers, though there are plenty of those (150,000-plus), Mr. Hong said. Many utilize the tools to improve their financial standing. As their needs change over time, they may choose to participate in a refinancing loan or other product obtained directly from MoneyLion or through one of their partners.
That ongoing relationship is a rarity in an age where many traditional loan providers want to sell you the product and never hear from you again. Many even sell off that loan.
MoneyLion focuses on the customer relationship, Mr. Hong said. For example, they educate customers through a rewards program by educating them about the components of their credit score. Knowing that credit scores are positively influenced by keeping credit utilization under 10 per cent, they reward customers who do that.
An ongoing relationship also produces data, not to sell but to be used to identify when a loan can help customers reach their financial goals, Mr. Hong said.
“What we started to realize was that as we improved our customers financial wellness we saw credit scores improve. We wanted to maintain that relationship with that customer.”
Those tools can inform a customer that a consolidation loan could save them $100 each month, or let them know how much they spend on coffee each month as a way of encouraging them to save for a financial goal.
A key aspect of MoneyLion’s approach is their ability to integrate data from sources like customer bank accounts that allows them to understand typical cash flow patterns and suggest appropriate financial products. Aberrations in normal activity may indicate fraud, which can be addressed before serious harm takes place.
The fintech industry has emerged from the novelty phase and if it is to increase its relevance providers must continue to add value beyond speed and convenience, which is now the floor, Mr. Hong said. Providers must look at customer goals and produce multiple solutions which meet those goals.
Start with the two most identified customer needs revealed in a recent survey, Mr. Hong suggested. Credit score improvement and debt reduction or immediate needs and must be addressed in the near term. Three ways to do that are by actually providing them with their credit score and monitoring it daily, building credit by reinforcing positive behavior such as on-time payments, and making appropriate loans.
Nurture that relationship by having an authentic conversation with your customers, Mr. Hong advised. Millennials have developed a mistrust of banks because traditional ones are incentivized to push behaviors that only benefit their bottom lines while ignoring any customer benefit. Talk to them, discover what they need and then provide it. Checking in on occasion doesn’t hurt either.
“When companies are well aligned with their customers that is a critical component among millennials,” Mr. Hong said.