Strategies used to achieve profitability in MoneyLion

Neobanks have long been questioned about their profitability, with issues such as low retention rates and challenging unit economics standing in the way. One key factor is that many customers do not use neobanks as their primary accounts, leading to slim interchange fees as their main source of revenue. Additionally, offering cheaper rates and no monthly fees further eats into their profits, making it challenging for neobanks to achieve profitability.

However, there seems to be a shift in the tide as neobanks have started to expand their services by offering bundled services. Neobank Dave managed to achieve profitability in the last quarter of 2023, while MoneyLion, which was initially a neobank but is now transitioning into a marketplace-first model, recorded its first positive Adjusted EBITDA in the first quarter of the same year.

MoneyLion’s strategic move to acquire two businesses, transforming them into an embedded banking product platform and an influencer content studio, paid off. The firm recently reported its first-quarter results for this year, showcasing strong performance with 1 million in revenue, a 29% year-over-year growth, and a 19% increase from the previous quarter. The Adjusted EBITDA margin in Q1 was a positive 19.4%.

“The key factor in our results is our diversified business model,” said Dee Choubey, CEO of MoneyLion. “We expanded our consumer reach significantly, further developed our marketplace, and improved our personal financial management (PFM) experience.”

With neobanks implementing behind-the-scenes strategies to enhance their services and revenue streams, it seems they are on the path to achieving profitability and sustainable growth in the future.