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A.I. will Now Fight Your Overdraft Fees for You

Artificial intelligence is here to help you keep more of your hard-earned money in your pocket, rather than from going to banks and their pesky fees.

A.I. will Now Fight Your Overdraft Fees for You

DISCLAIMER: Neither the author, nor Providers & Families Wealth Management, LLC or its employees, are affiliated with, compensated, or endorsed by Cushion. This is not an endorsement of and should not be read as such.

By Scot Whiskeyman

As a frugal consumer (and one that just hates paying overdraft fees), a new service caught my attention this weekend. Scrolling through my Facebook newsfeed, I was served an ad that said something to the effect of: “Wow! In less than 24 hours I had $427 in overdraft fees returned to me, thanks to Cushion.” Sound click-baity? It did to me, but I clicked (or tapped, rather) nevertheless. I want to talk about my experience, but first, let’s talk about A.I.

Boy, has it ever come a long way.

Back when I was in high school (about 15 years ago), I used AOL instant messenger to talk to classmates and friends online. There was no Facebook, and there was no Facebook messenger. No one owned a smart phone, because they didn’t exist. People communicated online either through e-mail or “AIM”.

One day, a group of individuals at AOL decided to try something radical: create a profile (in 2000’s vernacular, the term was “screen name”) for Artificial Intelligence. Enter SmarterChild, one of the very first artificial intelligence chat bots.

Simple in its design, SmarterChild was created to have basic conversations, learn from conversations it had with users, and adapt. It was rudimentary at best, but it was innovative and ahead of its time.

A screenshot of an AOL instant messenger conversation with SmarterChild.

Fast forward 13 years to 2017. Ever the networker, I connected with the owner of a successful Harrisburg-based technology business (not related to A.I.) while attending an event at a local healthcare institution. I followed up with him about meeting for coffee, to which he agreed, and looped in his assistant Sophie, to schedule it. We got a day on the calendar, only for him to be involved in a fender-bender and have to reschedule.

“So sorry, Scot! David’s been in a car accident and needs to reschedule,” she said.

“I’m so sorry to hear that! Please tell David I understand, and give him my best!” I responded.

“Absolutely,” Sophie said. “Will do!”

After more than a year (yes, a year – apparently David is very in demand) I managed to get an appointment on the calendar with him. My successful attempt was the result of me e-mailing not him, but his assistant. I was very impressed – I e-mailed her at 6:30 at night, and received a response fewer than 20 minutes later with his availability.

When coffee finally happened, I was sure to compliment Sophie. People that are hardworking, courteous, and professional are rare, at best. “Your assistant is awesome,” I told David. “She’s so polite and she responds very quickly.”

His response? “She’s A.I.”

I was flabbergasted. The last time I had communicated with A.I. was with my friend SmarterChild in high school. Had A.I. really advanced so far that I couldn’t even recognize I was talking to it?

Turns out that this A.I. that David used was part of a pilot program by a startup out of Silicon Valley. David managed to snag their services for free. For someone like myself, use of A.I. would cost about $400 per month, he estimated.

Fast forward to this past weekend, when I would experience the wonders of Artificial Intelligence first hand once again. After clicking on the Facebook advertisement for Cushion, I was taken to a website, where I was prompted to enter my e-mail address to get started. Next was a list of financial institutions with a question: which of them do I use? I selected several of them (note – there was no option for “other.”)

What happened next surprised me a little. Expecting to be taken to an app I needed to download, I instead received a message from Cushion’s Artificial Intelligence via Facebook Messenger, where I was prompted to select a financial institution. If you’ve ever used Intuit’s Mint, or Fidelity’s eMoney, Cushion uses similar encryption techniques to securely log on to your financial institution’s website and download your account data – the difference, of course, being that Cushion combs through your transaction history and finds not just fees, but interest charges – and will actually negotiate with your bank to get them refunded to you!

Sound too good to be true? I thought so, so I did a little digging. In setting out to understand how Cushion works, my primary questions were a) how exactly does this artificial intelligence “negotiate” with financial institutions, and b) how did it make any money doing so on your behalf? The answer to the first questions is extremely straight forward: large financial institutions have e-mail, SMS, and online messaging services that allow you to chat with a customer service representative. Cushion connects with them, with your permission, on your behalf, and negotiates with them for you. A.I. had me fooled once – it can surely fool an unwitting customer service representative at a bank.

To make money, Cushion charges a hefty 25% of any overdraft fees or interest charges it manages to get credited to your account. I’m not sure of the exact mechanism the company utilizes to get paid, but I can tell you that because of my banking history, I knew this had to be an extremely profitable venture. Some research proved just how right I was: the most profitable banks in the United States collected $11.16 billion in non-sufficient funds (NSF) revenue in 2015, according to Pew research. Just imagine: if Cushion could capture just 5% market share, it would net nearly $140 million in revenue.

Is it worth a shot? That depends. Are you the type of person who pays a lot in interest charges, but manages to pay down your credit card balance to zero every 3-6 months? If you’re carrying a balance right now, you’ll have to first reduce your balance to less than 10% of your total credit, or Cushion will deliver you some bad news – financial institutions won’t negotiate with you unless you do. The other way you can save money is if you happen to pay a good deal in overdraft fees. If you don’t have time, or have exhausted all options talking to a branch manager, then what do you have to lose? 75% of the fees you already paid is better than 0% of them.

Bottom line: Cushion is simple, user-friendly, and easy to use. The downside is that because it’s so new, it only works with a handful of financial institutions (actually four, as of this writing). Still, it’s amazing to see how far A.I. has come over the past 15 years, and it’s incredible to see the innovative solutions it’s providing to consumers. Who knows where it will take us next.

You can check out Cushion yourself here.

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