How this startup is using gamification to create financially responsible millennials

When Joe Bayen first came to the United States on a track scholarship in the late-1990's, he was presented with the opportunity to sign up for a credit card. What he didn't know, though, was how credit worked, and several late payments later, he found his credit score had taken a big hit.

Now years removed from his credit woes, the founder and CEO of Santa Monica-based Lenny has created a platform that rewards users for making smart financial decisions, allowing them to grow their credit score while learning valuable lessons on money management, something he wishes was available to him when he was approved for his first credit card.

“The key reason why the platform was built was because when I came to the US, I was welcomed by banks offering me credit cards and free t-shirts, and I thought it was amazing,” said Bayen. “But I had no idea how credit worked, and it eventually took me five years to rebuild my credit score.”

Bayen was eventually able to rebound from his credit woes, moving to Santa Monica and founding FreeAppADay.com and ICS Mobile, Inc, before serving as Entrepreneur in Residence for Science Inc. But the desire to help students build a healthy credit history was only bolstered by the recession. As a result of the Credit CARD Act of 2009, a credit card reform legislation, college students found it harder to get approval for credit cards, leaving them with no credit history upon graduation.

“Banks are no longer allowed to advertise in schools as a result [of the Credit CARD Act of 2009], which on one hand was good, because students wouldn't be burdened with a 25 percent interest rate on a card they didn't really know about,” said Bayen. “But at the same time, one of the good things that credit cards offered students was the chance to establish a credit history at the same time.”

Through gamification, Lenny — which launched in March of this year — reinforces positive financial behaviors amongst its users. For on-time payments, users receive a certain amount of Lenny points, while payments-in-full garner even more points. As users grow their credit score, Lenny boosts the line of credit offered to them, as well as recommends users to financial partners so they can diversify their credit history.

“Our team comes from a gaming background, so we have a good understanding of the psychology behind creating an app,” said Bayen. “In the past, many premium app developers were using the same achievements to extract as much revenue as possible, but we are using these mechanics to reinforce good financial behaviors that will benefit the user base.”

Last month, Lenny joined the 24 fintech companies at the Plug and Play Accelerator, having been chosen from almost 800 applications. The startup, which now boasts 14 employees, plans on closing a Series A round of funding in the fall before expanding nationwide. 

With this growth, helping millennials grow their credit history in a safe and educational manner still remains Lenny’s mission. 

“We're creating a system where everyone wins, essentially,” said Bayen. “The user gets greater access to credit and increases their FICO score, and the banks are receiving responsible borrowers.”