Don’t want to build a budget? These alternative bank accounts aim to automate the process

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Six years ago, Digit rolled out a chatbot to shake up the way we save money. In asking to connect to our checking accounts, the startup automatically moved how much we could afford to save every few days or so. Now, the popular fintech company is on a bigger quest to zap another vexing banking task: manual budgeting.
“A lot of people still struggle to pay bills on time in full,” says Ethan Bloch, founder and CEO of Digit. “We’ll see people even in Digit use their rainy day savings to cover a bill that comes up that could have been planned for. It’s not a totally unexpected expense.”
Digit’s antidote, announced Tuesday morning, is a mobile account called Direct. It includes dedicated wallets for bills, goals and spending as well as a physical debit card. You enter your goals and your regular bills but Digit decides how much goes where. Your deposits, meanwhile, are held at its partner bank, MetaBank.
“Your bank should budget for you,” Bloch says.
‘The future of finance is automated’
The newest iteration of Digit, currently open to a small pool of customers, is the beginning of an innovation long-discussed in financial services circles: A smarter bank account that makes daily money decisions on your behalf based on the data it already has — your bills, your direct deposits and your spending patterns.
Wealthfront has been rolling out features for its cash management account that essentially move your money to where its algorithms believe are the best places for it based on your goals. In 2020, Douugh launched a digital account in the U.S. to automate money decisions, while Envel introduced budgeting on autopilot. Financial institutions, including Ally Bank, U.S. Bank and Chase, have also been deploying technology to automate some of the tedious points of getting your money to do your bidding.
“As a consumer, what you really want is a master account that pushes your money in all the directions that it needs to go,” says Alex Johnson, director of fintech research at Cornerstone Advisors.
It’s early, but the latest digital banking experiences are designed to solve an age-old goal: How do I spend less and save more?
For many, achieving that goal has been elusive regardless of tech advances.
When mobile banking started taking off more than a decade ago, the promise was that consumers could improve their finances by using bank apps connected to on-the-go devices.
It didn’t cure the savings crisis. Now, like then, millions of Americans lack the means to pay for an $1,000 unexpected emergency with their savings. But this newer crop of fintech upstarts are betting they have a better formula to improve financial outcomes than yesteryear’s budgeting tools — their algorithms make decisions for consumers. The concept is often likened to self-driving: You tell the bank app your destination and it figures out how you can reach your goal, making tweaks along the way so long as it has your direct deposit.
The concept is already evident in robo-advising but the grand vision touches all areas of personal finance.
“Your bank is going to become more than a place to stash your cash,” says Omar Green, founder of fintech startup Wallet.AI.
No fees, no penalties for consumers
Green can imagine an algorithm that would dictate the optimal number of credit cards to have as well as manage your credit utilization so that you can go about your life without constant worrying about making costly financial decisions.
“That’s the hope,” Green says.
If the dream is realized, it would make for a remarkable shift in financial services. Instead of just holding your money, the bank account would crunch your data to solve the troublesome puzzles that might have resulted in a penalty if you got the answer wrong.
“You have to be right a lot,” Green says. “Because when you are wrong, you get taxed for it. You get all kinds of bank charges. You get all kinds of letters and notices and dings against your credit.”
While the industry continues to lower the price of penalty fees — Ally Bank, for example, recently made overdraft fees free — this kind of bank account is a much bolder idea.
The whole no-fee banking thing is commoditized. … The actual value is, ‘How do we build an app that you are so reliant on day to day that it will change your life?’
— Andy TaylorFounder and CEO of Douugh
Not everyone agrees that consumers will be able to easily set their finances on autopilot anytime soon. For a smart bank account to succeed, it would first need to inspire consumers to connect their financial data to lesser-known brand names and figure out how to keep them using their apps long enough to accomplish a behavior change. It would also require disrupting age-old banking business models, conquering technical issues tied to a legacy industry and not botching an algorithm. Add in security and privacy concerns, and the going gets even tougher.
Yet, a push to make banking decisions on consumers’ behalf is a direction plenty of entrepreneurs believe banking is heading.
“The future of finance is automated, without a question,” Bloch says. “It’s a matter of what parts and when. When you jump forward 10 or 15 years, it’s vastly more automated for consumers. It’s just the way it will go. People will need to get used to it and trust it and the right interface needs to get built so they know they are still in control. But it will just deliver better financial outcomes and it will be easier.”
Automated budgeting as bait
For now, the new Digit account is designed to replace manual budgeting. Its bills wallet, for example, not only shows you your upcoming disbursements but automatically moves money into the wallet to pay them. Digit will also supply you with a separate virtual debit card to pay these bills in addition to providing a physical debit card linked to your spending account — so if your physical card goes missing, you can still cover your bills.
There is a price for making decisions on your behalf. After a 30-day free period, you will pay $9.99 per month (or $95 per year) for the suite of services.
While it’s hard to entice consumers to switch to a new bank account, Bloch believes the automated budgeting functionality is compelling — it solves a common problem and saves people time.
He’s not the only one who thinks so.
Douugh, a fintech startup that partners with Choice Bank on a digital bank account, is pursuing a similar strategy: The startup automatically moves a portion of your paycheck into a virtual bill jar, among other jars, like savings and spending, to budget for people.

“We said if we are going to do this, we need to control the paycheck,” says Douugh’s Taylor. “We need to control the money flow. We need to be the center bank where you are paying your money into to get the most out of this.”
What this means for you
Only time will tell if these fintech brands succeed in improving financial outcomes. Right now, you can sign up for the waitlist for Digit Direct before its public launch this fall. At Douugh, you can sign up for the account if you have an iPhone.
As they develop their products and try to woo new customers, these disruptors will face obstacles, including inertia. The average U.S. adult has used the same primary checking account for about 14 years, according to a Bankrate survey. Nowadays, all kinds of competitors are vying to replace the traditional bank account with something better, too. Here are some of Bankrate’s favorite options.
If Bloch has his way, Digit will be among the companies that help customers better manage their money as well as inspire traditional banks to follow suit.
“We need to push for the change we want to see,” Bloch says.
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