Neobanks Are Struggling to Make Good on Their Lofty Promises

Digit is a trendy financial technology company in San Francisco that offers traditional banking services online, complete with a tool that can automatically allocate a portion of customers’ deposits to a savings account to match their investing goals. The service comes with a “no overdraft guarantee.”

Sound too good to be true? According to the Consumer Financial Protection Bureau, some of it is. Earlier this month the regulator hit Digit, now part of Oportun Financial Corp., a lender in San Carlos, Calif., with a $2.7 million fine for falsely advertising the no-overdraft guarantee.

Turns out, the algorithm Digit used ...