Behavioral Finance in Fintech: Ideas from Revolut, Momo E-Wallet, Eagle Alpha, and Other Pros Worldwide
Armada Labs shares use cases of alternative finance applications that demonstrate broad opportunities presented by behavior-based analytics.
Behavioral finance became a reality once fintech met AI. Since its inception in fintech, AI has been improving analytics in the domain, providing more data sources to process — the ones based on user behavior. That’s why we call this type of analytics “behavioral.”
Let’s see how fintech forever changed data analytics and how it helps businesses worldwide make informed forecasts. The established fintechs guide our research, and we learn from the best of them.
The World of Innovative AI Tools in Fintech
Personalized Finance Planning with Revolut
Due to its tremendous popularity, Revolut doesn’t need an introduction. However, we will make a brief one for the sake of the use case to review. The provider of individual financial services flexibly adjustable to clients’ demands has been making significant strides lately to become even more “personal.”
Almost a year ago, Revolut introduced a budget planner for smart finance analytics. Specifically, the planner allowed clients to track how they spend money with the automatic categorization of expenses. Based on the users’ spending behavior, the tool provided forecasts on their remaining budget. The users can specify the sum they plan to spend each month, and the app calculates the maximum amount for daily spending accordingly.
Last year, Revolut also began giving personal loans for which clients didn’t have to pay any interest or security. The loans range between the “lump” sums of €1,000 and €8,000, and to get one, the clients must be over 18 years of age and be active customers of Revolut.
Global Remittances with TransferMate
TransferMate is an international money transfer service located in Ireland. Besides such features as cross-border money transfers, personal e-wallets, integration with external accounting software, and more, the provider stood out with a new finance solution through which business clients could reduce their DSO while retaining control on invoicing and cash flows.
In essence, companies get money faster than before, while invoice reconciliation is handled automatically (an indispensable aid for financial accountants at times of COVID-19).
With TansferMate, traditional challenges, such as longer debtor days and payment processing times, unexpected money charges, and burdensome administration, remained in the past, as well as several specific ones (FX rates in particular). Local bank accounts can be a part of the global network, and their clients can utilize banking services where the amount billed equals the amount received.
Simple in its use, the software ensures comprehensive tracking and provides real-time updates on payments and invoices. The paying client sends money to TransferMate in their local currency, which is then transferred to the billing company in the appropriate local currency (depends on the company’s country of residence) of the same amount. Usually, payments are received in a day or two.
Flender Ensures Automated Investing
Flender is a P2P platform that brings together business investors and borrowers. Credits range between €15,000 and €300,000, with repayment terms of up to three years. Flender works with investors of any size, performing the due diligence of every business or individual that applies as an investor. The validation process includes account audit, identity checks, and, essentially, credit vetting.
Also, Flender has manual and auto investing features. The latter is for the so-called “passive” investors who usually don’t have time to manually choose whom to support. Another benefit is the automatic reinvesting of fixed repayments, which saves investors with diversified portfolios from the manual distribution of funds received.
The feature is simple to use; an investor only specifies the amount they wish to invest in the project, the affordable risk grade, and investing duration (in months).
Momo Super E-Wallet for Easy Everyday Purchases
Momo E-Wallet is a feature-rich “super app” that provides smartphone users with versatile payment solutions. Originated in Vietnam, the app became a daily companion to many Vietnamese, covering operations from daily purchases to cross-border remittances. Currently, the app has more than 10 million active users that are often given a cashback bonus from Momo’s purchases.
After the recent “Super Cashback Day” event, the app was ranked among the top three downloaded free apps on iOS and Android. The e-wallet itself changes the payment habits of Vietnamese, encouraging them to purchase more through the app.
Indeed, digital wallets already became a hot trend, and Momo E-Wallet is “living proof.” It works with more than 100,000 POS all around Vietnam so that users could pay for lunch, buy goods, book tickets as they go — Momo is a single solution for each of these tasks.
Alternative Financial Data Analytics with Eagle Alpha
Eagle Alpha provides a single platform for trial datasets from established investors and newcomers in the alternative finance field. Out-of-the-box, the developers offer over 20 alternative datasets ranging by category.
One of the datasets is, for example, the geolocation one. It stores the data on unique hourly store visits, while location info is collected from the codes attached to the products. On the other hand, the information on consumer product transactions includes daily transaction info aggregated from active users’ payment cards, including debit cards, reward cards, and gift cards.
Indeed, the applications are versatile. Say, for company owners and recruiters, there’s a dataset that accumulates info from hundreds of millions of public profiles and job postings, deriving meaningful insights such as retention rates on specific job roles.
In Conclusion
Undoubtedly, AI raised the bar in fintech data analytics, introducing businesses with even more “alternative” data sources. The above examples show that AI gives more leverage as now one can better segment consumers, defining specific patterns in their spending behavior.
