How these AI-powered finance apps are helping young adults manage tight budgets

AI-powered financial apps Cleo and Bright are marketing personalized chatbot advisers to Gen Z and millennial users while simultaneously promoting financial products and services.

The core offering: Both Cleo and Bright connect to users’ bank accounts to analyze spending patterns and provide automated financial guidance through conversational AI interfaces.

• Cleo positions itself as a financial “confidant or coach” according to CEO Barney Hussey-Yeo
• The apps promise to help users better understand and manage their money through AI-driven insights
• The technology aims to provide personalized financial advice based on individual transaction data and spending habits

Revenue model and monetization: These AI advisers rely heavily on upselling financial products to generate revenue.

• Cleo derives approximately one-third of its revenue from cash advances with expedited processing fees
• The company also generates income through subscription fees and a credit-building card offering
• Bright focuses on connecting users to third-party lenders, often promoting high-interest loan products

Target demographic: The apps specifically focus on younger consumers facing financial challenges.

• The services target Gen Z and millennial users living paycheck to paycheck
• According to Hussey-Yeo, 60% of Americans live paycheck to paycheck, representing a large potential market
• These demographics may be particularly vulnerable to financial products with high fees or interest rates

Potential conflicts of interest: The dual role of adviser and product seller raises significant concerns.

• The apps’ AI systems frequently prioritize product recommendations over substantive financial guidance
• Users may receive advice that steers them toward fee-generating products rather than optimal financial solutions
• The business model creates an inherent tension between providing unbiased advice and driving revenue

Critical considerations: The emergence of AI financial advisers highlights important questions about trust and accountability in automated financial guidance.

• While AI technology can provide valuable insights, the profit motive may compromise the quality of financial advice
• Users should carefully evaluate whether these services truly prioritize their financial wellbeing
• The lack of regulatory oversight in this emerging space leaves consumers potentially vulnerable to predatory practices

Looking ahead: The growing adoption of AI financial advisers may require closer scrutiny of how these tools balance user interests with profit motives, particularly as they target financially vulnerable populations.