Quick Take: MoneyLion partners with Column Tax – but how does the partnership align with the former’s product suite?

Data shows that many tax filers plan to use their refunds to accomplish other financial goals. A new Bankrate survey shows that 3 in 4 Americans expecting tax refunds consider that money important for their finances. 28% of people would utilize their tax refund money to pay down debt and 26% would use the funds to improve their savings portfolio amidst biting inflation.

Filing taxes in America can be a complex and time-consuming process, and there are several pain points that taxpayers may encounter. 

In order to provide a simplified tax filing experience to its customers, MoneyLion has partnered with Column Tax, a personal income tax software company.

The tax code in America is complex and constantly changing, which makes it difficult for taxpayers to understand and use the system. While the intricacy of data collection and validation from multiple sources increases the chances of errors and makes the process slow.

MoneyLion is equipping its new offering of tax filing services with a suite of educational content to help its customers file their taxes smoothly this tax season. The neobank users of the service can get their return paid up to two days early. 

MoneyLion's product offerings include online checking and investment accounts, cash-back rewards, installment loans, lines of credit, prepaid debit cards, and point-of-sale consumer and merchant financing. 

So how is this partnership in line with its product suite?

“MoneyLion aims to help people organize their financial futures by offering financial guidance through content, and providing easy access to tax filing is a logical next step towards this mission,” said Tim Hong, chief product officer at MoneyLion.

This partnership provides room for Column Tax to expand its total addressable market and explore more possibilities.

“We are given a new opportunity to take the next step for our customers organizing their financial future through MoneyLion’s offerings and easily digestible content,” said Gavin Nachbar, co-founder, and CEO of Column Tax.

Column Tax’s service offering is accessible by MoneyLion customers who have a RoarMoney Banking account, an FDIC-insured online checking account with eligible deposits.

The service is free for RoarMoney users who have direct deposits set up in their accounts. However, MoneyLion app users who are not RoarMoney customers can sign up for a RoarMoney account to get hold of the new offering.

What’s brewing for MoneyLion?

MoneyLion shareholders have had a rough ride lately, as the firm’s share price tumbled 80% last year. Although the past weeks saw a lift for owners of the stock, they're still in the red over the last year, followed by an 18% decline in the firm’s share price in February this year.

Earlier in September, the neobank’s lending activities came under fire when the Consumer Financial Protection Bureau sued the company, alleging it overstepped the Military Lending Act. 

MoneyLion allegedly charged more than the legally allowable 36% rate cap on loans to servicemembers through a combination of stated interest rates and monthly membership fees. The neobank also often refused to cancel paid memberships, according to a lawsuit filed by the Consumer Financial Protection Bureau.

MoneyLion was at loggerheads with the CFPB over its complaint, claiming it was false allegations.

All things considered, the question then becomes whether the company can gain ground in the long term on the strength of its underlying businesses?

“The company’s strategic acquisitions of MALKA and Even Financial are paying off and in many ways, MoneyLion was ahead of the game in seeing the need for embedded finance, an innovative marketplace, and content as a differentiator,” said Hong.

Besides its acquisitions of MALKA, which is the media arm of the company, and Even Financial, a marketplace technology that connects and matches consumers with personalized financial product recommendations from banks, insurance carriers, and fintech companies on mobile apps, websites, and other digital touchpoints – the new partnership with Column Tax illustrates the neobank’s strategy to create diversified streams that would help it increase revenue.

The neobank also launched MoneyLion University in October last year to improve financial literacy and drive new users to its platform.

“It’s important we all work hand-in-hand to bring forward innovation that benefits the consumer and makes a positive impact. Our mission is always to provide better financial outcomes for our customers through products, offerings, and content and we look forward to continuing down that path,” added Hong. 

With the evolving role of partnerships in the open banking and embedded finance landscape, the neobank is shifting its sails to create more value for consumers and its enterprise B2B partners. 

MoneyLion uses machine learning-based algorithms and big-data analytics to programmatically underwrite loans. As automation is gaining momentum, AI is already changing the market and opening up new possibilities for businesses in the coming years. In light of this, the firm plans to build on its machine-learning capabilities to grow its business and deliver value in 2023.