AI For The Little Guy: MoneyLion Uses Machine Learning To Build Consumer Financial Products

The AI projects of huge firms like IBM, Facebook and Google get headlines and center much of the buzz around the technology. This tends to focus the discourse around AI applications in the “SkyNet” sort of corporate tech run amok sense, but some AI tech has less potential to lead to a singularity.

Take MoneyLion, a personal finance app that uses machine learning to analyze hundreds of thousands of transactions its users make in order to recommend them financial products and help manage their money.

Benzinga caught up with MoneyLion CEO Diwakar Choubey to learn how the company uses AI for consumer products instead of winning Jeopardy!.

Benzinga: At a high level, what is MoneyLion?

Choubey: Our company is a digital finance platform. Our mission really is to use advancements in artificial intelligence and machine learning into consumable products and bring that technology to everyone in America. High finance shouldn’t be limited to just private bankers, but should be proliferated through digital technology to everyone. We want to bring more sophisticated, but more approachable, products to consumers.

Benzinga: Why did you start the company?

Choubey: I was in investment banking for 12 years. If you remember 2013 we were coming out of one of the worst credit crises the U.S. and world had ever seen. In the aftermath, regulation like Dodd-Frank left banks on the sidelines [in terms of the consumer], which meant they failed to create products directly for consumers. If you weren’t super wealthy, it became very difficult to get good financial products.

That was one of the backdrops for us wanting to create a direct-to-consumer product. The other trend we noticed was people became more comfortable using their mobile phones to transact and input important information. Remember for a long time people weren’t comfortable sharing information like social security numbers in transactions on their phones, even when applying for financial products.

So the opportunity to reimagine direct-to-consumer financial products presented itself. We wanted to use technology to give financial access to a segment of the population that historically didn’t have access to that technology.

Benzinga: So who are your competitors? Other fintech companies, the banks, or both?

Choubey: No one really does everything we do, but there’s elements of things that we do in other personal financial management apps. If you think about the things we’re doing with data technology—we have over a million bank accounts linked to our app, we see over $150 billion in transactions from our consumers—and that allows us to build an artificial intelligence layer that will say “Hey, you spent $10,000 more than you usually do based on your own data, here are the next five financial products that can help you spend less or earn more.”

We’re also like a financial institution in that we have loan products — personal loans, ways to save, and other forms of money management. It’s a combination of what traditional institutions do, but adding on a smart personal banker and advisor. 80% of our customers don’t take loans from us, but use our tools for the free characteristics.

Benzinga: How did you realize that AI was the way to go?

Choubey: One of it was market factors — when you’re a young company you need to find ways to scale. The U.S. has 3,000 banks and hundreds of fintech companies. Ultimately, if we want to convince our investors to keep investing, we needed to show ways to scale and operating leverage.

AI gives us the chance to compete with much larger and much better-staffed competitors. AI is the only tool that existed that let us build this much technology with the limited capital base we had.

Our headcount has grown at a much smaller pace than a number of our competitors over the last four years, but if you look at, say, our mobile app downloads or number of transactions, those have grown at a much faster pace. All of that is a testament to building a scalable technology platform.

Benzinga: There are a lot of consumer-based companies using AI. What separates MoneyLion?

Choubey: So AI isn’t a new thing — for example, the Department of Defense and various government agencies have been using it for 25 years. But the rise of cloud computing and powerful infrastructures like Spark and Hadoop are getting more proliferated and democratized. It’s getting to the point where small and midsize companies can get started visualizing data without hiring teams of data scientists or paying consultants.

Artificial intelligence is only as good as the data you have, and we have a lot of it. We have four years of tremendous amounts of data, we have over three terabytes of interaction data. We have 350,000 people using our credit monitoring tools, hundreds of thousands of people are taking loans from us. Our ability to analyze that data very quickly and iterate on it is ultimately the differentiator for us. We create an ecosystem for testing and updating our model.

Benzinga: The emphasis on human interaction is very interesting — I get the feeling that this shift towards chatbots will lead to a correction, in which people will want to go back to talking to human beings. Do you agree?

Choubey: I absolutely agree with you and I see that on a daily basis, especially on our the financial product side. A lot of people with us will start off on a chatbot that uses natural language processing. The bot can tell when someone’s getting agitated, and if that happens will immediately, automatically change the conversation over to a human being.

The UX is really good for the consumer in that regard because they’re already engaged in the conversation, and a human being who’s already read the transcript and pulled up the file gets plugged in.

Those types of technologies that are getting integrated — the voice, the telephony system, the CRM, the wealth management system, to human beings, is happening in front of our eyes right now.

Tools like machine learning and natural language processing all help in delivering a better consumer product.

Benzinga: What’s the next major hurdle?

Choubey: The next major hurdle for us is continuing to scale. We’re piloting new products and finding the ones that really deliver a delightful consumer experience and fill a need better than a traditional bank. It’s optimizing the product that can really scale the business and take it to the next level.

Benzinga: What is your impression of the overall state of fintech and the personal finance vertical?

Choubey: It’s incredibly competitive and an exciting time to be in fintech. Technologies are emerging right as we speak that we still need to experiment with. Capital is generally available for those that have a good story, but not for everybody, so it’ll remain very competitive in that sense. Those that embrace the next generation technologies into processes that have existed for 20, 30 years will be the ones that will show value.

Consolidation and capital availability for the top ten percent of companies will certainly be a reality.

This article is exclusive to Nasdaq.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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