Managing money is something few Americans learn about in school—if you did, you were one of the lucky ones—but it’s a fact of adult life we all have to figure out eventually, ideally before collection agencies and the IRS are beating down your door. But even if you make enough money to pay your rent or mortgage, bills, student loans, car payments and other obligations, you’re probably not doing a great job of saving any leftovers. This is where the iOS app Digit comes in. It just might change your life.
Digit launched last year as an SMS bot that you connect to your checking account. The sophisticated software behind the bot analyzes your income and expenditures and starts socking away money in a savings account. Digit saves small amounts every couple days, ones you wouldn’t really notice, but they add up.
From chat to app
The company just released an iOS app (and a convenient Apple Watch glance) that makes your progress more visible. You can still use SMS to text commands to Digit, but the app offers a handy commands menu with shortcuts for checking your balance, viewing recent purchases, and withdrawing money. Think of the SMS bot as the banker, and the app as the bank, where you can pop in to check your balance and tinker with your settings. And the app is taking off: Since its launch last month, around 20 percent of users are opening it every day.
Digit isn’t actually a bank. Your savings in the app don’t earn interest—although banks are offering paltry interest earnings anyway—though you do earn “bonuses,” which are 20 percent of the interest that Digit makes by placing your money in a custodial account. Digit keeps 80 percent of that interest, which is its only revenue stream, for now. CEO Ethan Bloch told me he has no interest in turning the service into a bank.
“The future of finance is going to be a place where companies like Digit create the best customer experiences, but work with banks that provide these regulated financial accounts,” Bloch said. “Only banks can do these things.”
But Digit is planning to go beyond the savings account. Bloch told me the company is testing integration with credit cards and student loans. Digit will use that data to determine how much debt you can afford to pay down each month. There are a few regulatory hurdles the company has to jump through to offer those services, so Bloch told me those integrations won’t happen until the fourth quarter of this year or later.
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