How has going public via a SPAC impacted MoneyLion?

Founded in 2013, New York-based fintech MoneyLion is an all-in-one mobile banking platform that provides ways for consumers to borrow, save, invest, and earn. 

MoneyLion is led by co-founder and CEO Diwakar Choubey, who worked in senior positions at USA’s financial district in firms like Goldman Sachs, Citadel, and Barclays Capital back in the day. Chief Information Officer Pratyush Tiwari, Chief Technology Officer Chee Mun Foong, and Adam Green are the other three co-founders of MoneyLion.

MoneyLion’s initial target audience were otherwise unbanked or underbanked by the existing ecosystem and living paycheck to paycheck, which makes up roughly 10% of unbanked and around 24% of underbanked US individuals. Since its inception, the company's goal is to optimize consumers' money management and savings while boosting their credit.

In February 2021, the company announced its merger with Fusion Acquisition, the SPAC headed by James Ross, the ex-chairman of State Street Global Advisors’ global SPDR ETF business. However, the merger took longer than expected, resulting in the fintech going public on the New York Stock Exchange under the ticker ML in September 2021

Right after the merger, the firm experienced a rough patch with its stock down roughly 80% in November. However, the company is showing growth in different areas with multiplying consumers and increasing revenue.

This year in May, the company stated its Q1 2022 earnings as follows:

• Total net revenue increased 110% year-over-year to $69.71 million. 
• Adjusted revenue grew 105% year-over-year to $66.5 million.
• A net income of $0.1 million, compared to a net loss of -$73.4 million in Q1 2021.
• Adjusted EBITDA is $24.94 million, compared to $1.21 million in Q1 2021. 
• Total customers by the end of the quarter grew to 3.9 million, up 117% year-over-year. 

In light of MoneyLion’s 9-year-long journey and fresh off its IPO, I spoke with co-founder and CEO of MoneyLion, Dee Choubey, about how being publicly listed has impacted the fintech and what ingredients are required to keep a customer-centric neobank platform on track.

How did going public work out for MoneyLion?

Dee Choubey: It was the right decision for us. We were a private company for eight years, in which we'd raised a lot of venture capital money – the SPAC presented an opportunity for us to efficiently raise capital and we saw it as a capital raising exercise. Having said that, a lot of unforeseen circumstances exist – there are always pros and cons to everything. The tech markets and growth stocks have been hurt significantly, with a little bit of repositioning afterward. But our business is doing really well, fundamentally, and that's because we were able to access capital at the levels that we did last year very efficiently.

How do the two acquisitions, MALKA and Even Financial, fit into MoneyLion’s ecosystem?

Dee Choubey: In the beginning, we were skeptical because according to statistics, most mergers and acquisitions don't work. Companies may be doing great stuff on their own but when they collaborate, there often arises cultural issues affecting the alignment, strategic, and consolidation decisions. The management teams of MALKA and Even Financial shared our company DNA and we knew them from before as we had worked together in the past. Both were quantitative, entrepreneurial, and aligned with what we wanted to do. 

In the case of MALKA, we wanted to create a media arm for our company, so we can tell our own stories. For our existing consumer business which is a neobank: banking, investing, credit advice, marketplace – Even Financial, which acts as a two-sided network, was well-suited. This merger has fueled the expansion of MoneyLion's addressable market – where we don't have the ability to build the products ourselves, we can now leverage Even Financial’s embedded finance marketplace that includes more than 400 financial institutions and 500 channel partners. By combining the offerings from all three companies, we can provide a suite of products ourselves on a first-party basis and emerge as a company that's incredibly well diversified – more so than most fintechs. 

We believe this is the most interesting strategy in American finance that we're playing with: a media business, a consumer business, and an enterprise business. From an outcomes perspective, the business has significantly diversified revenues and is growing at an optimal pace. We are maintaining positive EBTIDA and having a real line of sight in the synergies among the three companies. That’s worked very well as a mesh to drive towards profitability. 

At the end of the day, the consumer wins by getting educated through content, personalization, and low cost financial products – all in one platform. That's the ultimate vision of having our own walled garden of financial content, financial products, and financial advice.

How is crypto trading and rewards offering shaping up, given the current crypto market meltdown?

Dee Choubey: That’s an interesting question because we never endeavored to be a competitor to Coinbase or have immensely professional crypto traders on our platform – the business equation was never meant to do that. What it was meant to do was engage consumers and enlighten them with literacy and education on the applications of Bitcoin. While a user can trade on MoneyLion, customers can roundup their debit card purchases in Bitcoin. We limit those roundups to Bitcoin because we think that's the way to proliferate a cryptocurrency, which is the most understood and decentralized. I think that starting off with roundups makes a lot of sense, because of the dollar cost averaging. Other than Bitcoin, we support Ethereum and only a couple of other digital currencies as we want to keep it simple and streamlined for consumers. 

We see crypto business as an important one but it's really a complement to the holistic approach we take with banking, credit, and managed investing, which is effectively a diversified robo advisor. At the same time, with more applications of crypto payments emerging, it's proving to be an incredibly powerful feature and that's where we want to start innovating as well.

What's the key to MoneyLion’s growth in terms of driving usage of its products across existing and potential customers?

Dee Choubey: In addition to having some of the great features, our entire company is built on roundups. If you look at our history, we always try to embed our platform in multiple offerings, by building one piece of software that's part bank, part investment, part lender, part advisor, and part rewards. So far this strategy is paying off because we are sequencing how the product portfolio gets served to the consumer, which is a part of our secret sauce. As we near a decade, we’ve gained sufficient experience in providing credit ourselves or brokering credit to consumers with third parties, which has made us experts in AML, KYC, fraud, ability to build models and algorithms around the ability to pay, willingness to pay, scale to pay, and working with credit bureaus. 

We've been one of the few platforms that can lend or credit broker to gig economy workers, hardworking Americans that are making $40,000 to $50,000 a year, whether times are good or bad.

With time, word of mouth, social, and peer to peer transactions are growing for us. With the addition of MALKA, we can now have contextualized and personalized conversations around the culture of money. Americans who are occupied in TikTok don't get taught about 401(k) plans pr 529 A savings plans, how to optimize all of the benefits that are granted to them by the government or their employer. We want to become the destination where those conversations are happening daily. This makes the media business really important for us to be able to attract and interact with consumers in an organic way. Then, of course, our products and those from the network of Even Financial fulfill inflection points that consumers have, which has started to resonate in Q1 2022, and we'll see that in Q2 as well.

What are MoneyLion’s short-run and long-run future goals?

Dee Choubey: I think in the short-term, we're prioritizing margin expansion, and to achieve EBTIDA breakeven, which requires us to be laser-focused on the products that we are working on. In the long term, since 75% of our company are engineers, data scientists, product managers, or product creators, we'll always be innovating and making what we have even better. Ultimately, in a couple of quarters, the expectation for MoneyLion is to drastically be more of a media platform, where we're creating financial content – users can create their own financial content and monetize that. It's just kind of putting those pieces sequentially together while maintaining the short term objective. Additionally, we want to continue meeting the standards we've set for ourselves and show our stakeholders that not only is this path leading to efficient growth but it’s profit-making too.