The digital banking startup MoneyLion is planning to launch a stock-trading service and high-yield savings account later this year, following a $160 million fund raise completed on Tuesday, bringing the company's valuation to nearly $1 billion.
MoneyLion, which offers a subscription for financial products and services targeted at the middle class, currently offers no-fee checking and managed investment accounts, cash-back rewards, credit monitoring, and a financial health tracker. It has more than five million registered users, up from three million a year ago.
"We're trying to build the Costco of the financial services industry – pay one membership annually or periodically and you can get access to everything," MoneyLion CEO Dee Choubey told Cheddar in an interview Friday.
In launching trading, which will include single stocks as well as fractional investing, MoneyLion is poised to compete with companies like Stash and Robinhood – both began as stock trading apps and later added bank accounts – but especially with Stash, which also targets Americans in the Heartland.
MoneyLion's trading service and savings account are expected to launch in the fourth quarter, Choubey said. The company doesn't currently have plans to introduce crypto trading, but Choubey said it will reassess the opportunity as it measures how users use the stock trading capability.
MoneyLion is also working on a credit card offering with a line of up to $5,000 for members on the higher end of the credit spectrum; as well as StayVest, a lending product that will allow members to borrow against their assets while staying invested in the markets.
"We never want to give the member a reason to leave our ecosystem," Choubey said.
When Choubey – a financial services veteran who has previously worked at Citi, Citadel, Goldman Sachs and Barclays – founded MoneyLion in 2013, he set out to create "the most powerful financial membership for the hardworking American." That subscription-based model is a departure from the old fee-income model — overdraft fees, out-of-network ATM fees, fees for not maintaining a certain minimum balance — that banks have historically relied so heavily on at the expense not just of customers' account balances, but their financial well-being.
"The validation we're getting from our members is that instead of paying different fees to cover different institutions, they want to bring all of their financial activity to one platform," Choubey said. "You'll see banks, including some of the ones investing in us, go that route."
Capital One was one of the investors in Tuesday's Series C fund raise, along with the Sioux Falls, South Dakota savings bank, MetaBank, and Cincinnati-based insurance and investment company, American Financial Group.
Existing investors Edison Partners and Greenspring Associates co-led the round; FinTech Collective also participated. MoneyLion has raised $200 million to date.
Stash, Acorns, and Qapital are among the startups bundling financial products into a subscription. Each offers different tiers of membership, which range roughly between $1 and $12 per month. MoneyLion currently offers two tiers: Core, which is free; and Plus, which includes a $500 5.99% APR "Credit Builder loan" and more rewards.
"It's a similar model to that of Netflix, where our membership fees compensate the cost of producing the content," Choubey said. "We've added a lion's share construct, where the cash-back element is tied to how much you use the account. That drives a scenario where consumers get more than what they pay."
The Plus membership will soon include instant cash advances of up to $250.
MoneyLion also plans to launch a third tier for more customers with more prime or super prime credit, according to a person familiar with the plans. A company spokesman neither confirmed nor denied this plan.
Content is part of the product buildout too. It currently includes 30-second market updates, the Lionomics series of financial tips and an HQ-like trivia challenge in the app. But the company is looking to do even more — particularly with video and entertainment, believing that strong and relevant content will help drive engagement and eventually (when every fintech startup has rebundled into a one-stop-shop for financial services) help it differentiate.
"We're building the technology of the platform but investing in the lifestyle element is somewhere we'll be spending part of the funding," Choubey said.
"We categorically believe that bank of the future is a lifestyle destination, not just a destination where you just bank or just trade."