While not a bank in the traditional sense, Oportun — formerly known as Digit — is offering a new way for consumers to do their banking that integrates artificial intelligence (AI) technology. Customers link their bills and credit cards, and Oportun’s algorithms determine how much should be allocated to each expense category when a deposit is made.

This type of fintech account is part of a new trend in the financial industry where banking companies are using advanced technology to make daily money decisions on their customers’ behalf. That includes setting aside money to pay bills, tracking savings goal progress and paying down debt.

The fintechs offering solutions to consumers’ budgeting challenges fill a gap that traditional banks have yet to tackle. But while the fintech industry poses a challenge to traditional banking, there are some areas where it falls short of consumers’ needs.

What consumers want from banking services

The reality of traditional banking is that it doesn’t always deliver on everything consumers are looking for. A study by Galileo found that of the 65 percent of consumers who primarily use a traditional bank account, only about two-thirds (66 percent) are satisfied with their bank.

Another study by FICO found that 70 percent of consumers say they’re likely to open an account with another banking provider if that provider can address their unmet needs. But what exactly are those needs?

One factor to consider is where consumers are struggling financially. The FICO study reported that 68 percent of consumers are stressed about money every month, and 53 percent say they aren’t on track to meet their financial needs and goals. Alongside that financial uncertainty, consumers are struggling to save: Bankrate’s latest emergency savings report found that only 43 percent of U.S. adults would be able to pay for an unexpected emergency expense with their savings.

In an economically tight environment, with fears of a looming recession, consumers need tools that can help them keep track of their spending and save more. It’s a tedious part of finances that takes time and effort, and many consumers might simply not be able to squeeze that into their busy lives — or they lack the resources to budget effectively. That’s where accessible, innovative technology can step in.

How automated budgeting works

By using AI and machine learning algorithms, fintech accounts can analyze customers’ data, such as their bills, direct deposits and spending patterns, and make daily money decisions for them. The goal is to help consumers reach their financial goals without having to constantly worry about making costly financial decisions.

“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, founder of Fintech Takes, a newsletter about fintech.

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.

Oportun was one of the first fintechs to offer these advanced tools. You can enter the details of your bills and credit cards, and the service will determine how much to take out of your paycheck or other deposits, so you can comfortably make things like car payments and monthly rent on time. When it deducts money allocated for bills, that money is moved into a separate Bills account. The money managed by Oportun is held by its bank partner, Pathward, so that it’s still protected by FDIC insurance.

Meanwhile, Mint is another service that comes with automated budgeting features, which allows customers to create unlimited spending categories. You can set spending limits for each of these categories, and the service will track how much you’ve spent in each category for you. You’ll get notified before overspending and will even receive recommendations for how to cut spending.

Unlike Oportun, Mint doesn’t serve as an alternative to a bank account. You’ll still need a separate bank account, but you can link all your accounts to Mint, which then tracks your cash flows and expenses.

What are the costs?

There is a price for having these decisions made on your behalf, and it’s important to weigh that cost with free options that are available to you.

Oportun, for example, costs $5 a month once the free trial ends. It factors in that cost along with your other expenses as something it automatically helps you pay. The $5 monthly fee is slightly lower than the average noninterest checking account fee, which is $5.44, according to Bankrate’s latest checking account survey.

Still, if you’re looking to avoid fees altogether, free checking accounts abound. Almost half (46 percent) of noninterest checking accounts charge no monthly fee, and many more offer relatively easy ways to waive their fee.

But consumers aren’t necessarily deterred by a fee if it gets them access to services they need. FICO’s study found that 45 percent of respondents were willing to pay a monthly fee for products and services that helped them with unmet needs. The top features they were willing to pay for include:

  • A service to help negotiate money situations
  • Self-driving budgeting
  • Recommendations on big spending decisions

If it helps you save more in the long run, paying for an account with automated budgeting could be worth it. But you might not even have to pay for automated budgeting. With Mint, you can use the basic version of the service for free. While it does offer Mint Premium for $4.99 a month — giving you access to advanced features and ad removal — the free version includes the budgeting tool.

The shortcomings of fintech banking

Not everyone agrees that consumers will be able to easily set their finances on autopilot. For a smart bank account to succeed, it needs 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 also requires disrupting age-old banking business models, conquering privacy concerns and not botching an algorithm.

Then, there’s the issue of digital-only service. While advanced technology is helping consumers in many aspects of their financial lives, online-only experiences lack the personalized customer service and face-to-face interactions that many consumers value.

A study by Frost Bank found that consumers are nearly two times as likely to prefer in-person services when planning for major financial events. Furthermore, J.D. Power’s 2023 U.S. Retail Banking Satisfaction Study reports that 38 percent of bank customers consider bank branches as “essential” — an element that fintechs will struggle to make up for unless they partner with banks that offer in-person services.

The bottom line

As they develop their products and try to woo new customers, these fintech disruptors will face obstacles, including inertia. The average U.S. adult has used the same primary checking account for about 14 17 years, according to a Bankrate survey. Nowadays, all kinds of competitors are vying to replace the traditional bank account with something better, too.

But these fintechs are highlighting the potential for technology to address voids in traditional banking that are detrimental to consumers’ financial wellbeing. They not only offer an alternative to traditional banking but also provide entirely new ways of managing your finances.

Even if you’re not ready to totally abandon your bank account, it might be worth considering doing at least some of your banking with a fintech company like Oportun or Mint and get access to advanced budgeting features. You might also want to look into other budgeting apps that do some of the legwork of creating a budget for you. Just make sure to evaluate the fees of these services and determine whether it’s a cost you’re willing to take on.