How it works
Digit works best for people who use their checking account for all of their purchases, from cups of coffee to bills, so the service has all of the granular data it needs to decide how much money you won’t miss. I’m giving Digit a try right now, though I put all my big and small purchases on a credit card I pay off every month to rack up rewards. The company says it can still reasonably estimate how much money to save without seeing that credit card activity, so I’m giving it a shot.
There is no evidence that using an app like Digit to save money is more effective than going it alone, but based on anecdotal data like savings amounts and withdrawal times, Bloch thinks Digit’s approach has been successful.
“The small dollar amount is the psychological, behavioral nudge more than anything else,” he said. “If you start seeing these small increments, you get the sense you’re making progress versus this painful single transfer on a monthly basis.”
The company has saved more than $101 million since its launch last year, so clearly something is working. Depending on how many people are using Digit—a figure the company doesn’t disclose—that number could be impressive. According to a December 2015 survey, 56 percent of Americans have less than $1,000 in savings (not including retirement accounts).
Trusting tech with your cash
And despite being a chatbot-turned-app, Digit appeals to more than just the Snapchat generation. Bloch says about half of the service’s users can be defined as millennials, while 22 percent are in the 35–44 age bracket. Younger folks are skeptical of banks in the wake of the financial crisis, but they’re not alone.
“Millennials are more trusting of startups and new technology, which benefits companies like Digit,” he said. “Banks are responsible for almost destroying the world. I graduated from college in finance in 2008 and thought, where am I going to work? Nowhere.”
He pointed to the success of Airbnb and Uber, which turned crazy acts like crashing on a stranger’s couch and getting a ride from someone you’ve never met into normal behavior.
“Something’s going on,” Bloch said. “We’re reasonably smart at Digit but the growth we’ve seen in the last year isn’t just how good the product is, it’s more the trend we’re seeing.”
Right now, Digit is working on ways to expand its messaging capabilities. Even tech giants like Facebook and Microsoft are betting big on chatbots, with occasionally disastrous results. If the future is automated money management, with bots that pay my bills and apps that save money for me, then I’m all for it.
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