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When London fintech startup Chip<\/a> launched late last year<\/a>, the company\u2019s vision was something a lot more ambitious than a simple \u2018micro savings\u2019 app delivered through a millennial-friendly chatbot. Instead, the plan was always to become a fully-fledged banking app that \u2018plugs\u2019 into your existing bank accounts and adds a raft of new functionality to help you make the most of your money. A significant update to Chip rolled out today begins to see that ambition become a reality.<\/p>\n In addition to helping you save small pots of money based on what Chip\u2019s AI together with access to your historical transaction data deems you can afford, the chatbot app has added spending insights and a clever new feature to help you pay off your overdraft. I\u2019m also told the company plans to launch \u201cSmart Credit\u201d later this year to replace your bank\u2019s overdraft facility altogether.<\/p>\n \u201cChip is the \u2018plugin banking\u2019 app that sits on top of your current account and does the things that actually help you with your money,\u201d the startup\u2019s CMO Alex Latham tells me. \u201cWe are tackling three of the biggest problems young people face: the inability to save money, the difficulty of tracking spending\u2026 [and] the problem of getting stuck in a cycle of debt and paying a premium for it\u201d.<\/p>\n Specifically, Chip\u2019s new pay off your overdraft feature is based on the premise that many people don\u2019t consider an overdraft as debt, in part because it is marketed by banks as \u201cavailable funds\u201d and, since it doesn\u2019t sit separate from your main bank balance, is almost indistinguishable from your own cash.<\/p>\n \u201cChip\u2019s first step to help people with their overdraft is to let them save to get out of it. By its very nature, you don\u2019t actively pay it back, you can just aim to go less overdrawn this month than last month. But all the while, your bank account shows your overdraft as \u201cavailable balance\u201d so it feels like the money is yours, and getting out of that cycle is incredibly difficult,\u201d says Latham.<\/p>\n To counter this, Chip alerts you if you are into your overdraft and lets you know the average amount you borrow each month and what it is costing you. It then puts its savings algorithm to work \u2014 the same one that powers the existing micro-savings functionality \u2014 with the goal to build up savings equal to your average monthly overdraft. Once that goal is reached, you are prompted to clear your overdraft in its entirety.<\/p>\n \u201cThe user has the option to save with Chip while overdrawn, putting aside a little bit of money every few days until they have enough saved up to pay off all of their overdraft debt in one go. Chip then notifies the user and gives them the option to deposit money back into their current account. Goodbye overdraft!\u201d.<\/p>\n Meanwhile, \u201cSmart Credit,\u201d which is pegged to launch in July, will attempt to wean you off an overdraft facility entirely by essentially replacing it, albeit with a less expensive and more manageable form of credit. According to the company, the way it will work is as follows:<\/p>\n Every time your current account balance drops below \u00a30, Chip instantly loads your current account with \u00a3100 of Smart Credit. The money is yours and Chip gives you all the information you need to spend sensibly, at your finger tips.<\/p>\n Smart Credit repays itself automatically at a rate you don\u2019t feel. It uses the the Chip algorithm to analyses your transactions and gradually repays what you owe. You don\u2019t need to do anything.<\/p>\n If you\u2019re having an expensive week, Chip knows and pays back less. If you can afford to pay back a little bit more, Chip will increase your repayments automatically.<\/p>\n<\/blockquote>\n \u201cEverything Chip does is based around these three fundamental problems which we face and offering a better UX for your money, all in a slick chatbot interface,\u201d adds the Chip CMO. \u201cWe strongly think that the answer to these problems come from a better banking app which doesn\u2019t force you to change bank\u201d.<\/p>\n In other words, according to Chip, \u2018plugin banking\u2019 is where fintech\u2019s future lies.<\/p>\n","protected":false},"excerpt":{"rendered":"\n
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When London fintech startup Chip launched late last year, the company’s vision was something a lot more ambitious than a simple ‘micro savings’ app delivered through a millennial-friendly chatbot. Read More<\/a><\/p>\n\n<\/img><\/a>
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