Episode 107: How BON Credit AI Is Helping Americans Beat Debt

Welcome to California Life Podcast. Today we are talking about another very important topic. As we've discussed earlier with multiple guests, we have to be well educated in the health and health issues or preventative care, legal field, and now it comes finally with our guest today. We're discussing your well-being in financial sphere of life. Sandar, thank you so much for joining us today. Thank you, Victor. Before we get into Before we get into the project, the company, the mission that you're on, which is again in financial field, first I'd like to learn a little bit about you and also want our audience to learn about you, connect with you. What brings you in the business, in tech business, and particularly into financial business?

So I grew up in India and I always wanted to be an engineer and a business person. So I did my engineering in India. And then I came to US to do my business school at Stanford University. And when I was at Stanford, I was exposed to how finance can change someone's life, right? And this was also the first time I took debt in my life, right? Like Stanford is this expensive school, right? Yeah. So I had like credit card, I had student debt, I had credit cards. And what happened, Victor, was like in one of those experiences, like managing different credit cards, I had no idea that I have to keep my utilization below 30%. I was using like 70 or 80% of my credit card limit.

Living the life.

Of course, this was my first card, so I had very, you know, low limit on my credit card. And then when I saw my statement a few months later, it was like 80 points down, and I was like, what happened? And that's where I realized like, hey, utilization is such an important component of that. And because my credit score went low, you know, I was not able to refinance my student loan at a cheaper interest rate. Right. And it was a $60,000 debt. Right. So there was a high APR. And when, like, interest rates went higher a few years back, you know, it was like close to 8% interest rate. Right.

Right.

So it was really hard. And that's where I realized, like, hey, this is not only my problem, it's a problem across the world.

Right.

And not just in America.

Right.

Right. And when we look at, like, young people, they have no idea about these little things. that they have to keep their utilization below 30%, right? They have no idea and no interest in tracking payments, right? They just want to have fun. Yeah. Like I was having fun in life a few years back, right? So that inspired me like, hey, it's not just my problem,

right?

It's the problem of millions of people around the world. There are 100 million Americans, you know, who revolve their credit card debt month to month. Consumer credit in US is close to $18 trillion. So that's where I got inspired, like, hey, this is a problem worth solving, let's do it.

Right, right. So the best business develops when you solve a problem.

Exactly.

Besides talking about the credit card debt, we also have mortgage and that type of debt. We have auto debt, multiple ways of banks selling their product to the consumer and packaging it with You know, selling a house is an American dream, which actually, you know, it's—

yeah.

So what drove you from engineering, which in multiple ways people perceive as, as a potential employee, into a businessman? Because that's 2 different mindsets.

Yeah, like after Stanford, I tried to build startups. I, I built 2 companies in the past, one in agritech and one in crypto. So I was always interested in finance, and finance is like one of the top reasons how it impacts someone's mental health.

Okay. Well, right.

Like you talked about health, right? For young people, if they don't have money, you know, it's extremely stressful. And they can talk about a lot of things regarding to their personal life with their friends. They can talk to— talk about their relationships to their friends. They can talk about their job with their friends. They can talk about their dreams with friends, but they rarely talk about debt with their friends. They rarely talk about money with their friends because it's such a personal issue, right? And there's no space or there's no safe space to talk about that, right? And that's why, you know, like people get into depression, people get into anxiety, you know, when they have high debt, when they got fired and they have no money and then they have to pay these credit card bills. It's a very stressful situation.

Mm-hmm.

So that inspired me like, hey, if we can build a business around this and help people really reduce debt, get better with their money, and that's where we realized like, hey, with technological shift happening right now and consumer behavioral shift happening, we are seeing a new breed of consumers evolving like Gen Z or young people. They are AI native. They use AI for homework, they use AI for editing their photos, they use AI for dating, right? So from morning till end, there is a part of AI in their life, right? But the world is seeing AI as bad because AI is eating jobs, AI is doing that, right? So the perception of AI is like not good, but we believe AI can be used, the technology can be used to change people's life. Right. And that's what we are doing at Bonn. Bonn means good, and Bonn is AI for good, right? So we use technology to change people's life, like reducing their debt, you know, making sure their APRs are low, making sure their utilization is low, making sure they pay bills on time, right? So it's pretty much on autopilot, and this cannot be possible without technology.

Right.

And that's where like engineering background really helps understanding consumer problem and using technologies to solve it. And that's where, you know, like engineering background with business aspiration really helps us to bring this idea into reality.

Right. One question that I do have while you are telling the story, people do have a lot of misconceptions about using Credit cards, loans. A lot of people are influenced by social media. They want to have what other people have or they show off to have. Expensive cars, expensive watches, expensive jewelry, lifestyle, whatever. And a lot of people, especially the young ones, they use credit cards for that. The issue stands not only on how you get out of debt, but How you not get yourself into it.

Yeah, I agree. And when you look at data, 70% of US GDP depends on consumer spending,

right?

Right. And you do need debt because not everyone is having, you know, tons of cash in their bank to buy— let's say you need to buy a house, right? You don't have like $2 million in bank, right? So you, you will need debt at some point. Now, to get the debt, at a cheaper rate, your credit score needs to be in a good position. Right. And the way to build that credit score is to take small credit and show good behavior towards that credit. And the best way to get small credit is through credit cards. It's credit on plastic. Anyone can have it, pay on time, build a credit history. You have a good score, good credit history, then you can buy things for necessity like a home, a car, or a lifestyle.

Right.

So, like, you cannot avoid that, and if you manage that correctly, it's actually a leverage.

Yes, yes, it is a leverage. That's the second point which I wanted to make because we could use debt and make it a good debt for assets. House could be an asset because you at least can sell it and then make some money off the increased value. But if you buy a car, It loses value right off.

Exactly. That's a liability.

Right, that's a liability. In your system, do you provide people with at least some sort of basic education on these actions that, hey, maybe think about using that for an asset instead of a liability?

So, what we have learned is that the current system failed to teach people To learn about finance.

Right.

Right. And the output of that failure is such a huge debt, like $1.2 trillion debt on credit cards.

Yes.

It's massive.

It is massive.

Right. $1.6 trillion debt on student loans. It's massive. Right. And the reason it's huge, because people don't know how to use credit cards in terms of, you know, like utilization managing, you know, they keep revolving, they People believe like paying a minimum balance is okay. It's not okay because you are also paying 28% on the remaining balance.

Yeah.

Right. So people need to make sure like, hey, if they do minimum balance, make sure either your remaining balance on a 0% interest, right, whatever card you have. And if it's not, then you better find or refinance or transfer your balance to a card with 0% balance transfer. Right. There is no point paying a minimum and then paying 28% or 30% interest on your remaining balance, right? So these are the things people need to learn. Most people believe like, hey, if I pay minimum, there is no interest on my remaining balance, you know, and then they open their credit card statement after 3 months and boom, it's like, you know, $1,000 spending on credit card is now, you know, like $1,500 or $2,000.

Yeah, I've seen that happening. And another little coincidence between yourself and me, you got inspired to work on this project based on your Stanford experience.

Yeah.

When I worked on my show, My American Family, I used to work with one of the persons on the team, and she was a Stanford graduate who came to our team as her first job. She had no clue about the taxes, finance, what is the credit card, debit card, and that inspired me to create Life Academy, which teaches kids and teens about all these things. So, we can definitely align also your program with our show. Yeah. But back to the credit and how you build it. Do you have any, again, educational elements in your software, in your tool for people to actually learn? Because I do blame media and social media for a lot of issues. First, from wishful thinking and wanting to drive a Mercedes when you really don't want it, don't need it, up to bigger issues. Now, in all this mess of junk information, we need someone with expertise who would teach them actually, hey, this is right, this is wrong. Do you have these pieces of information in your platform?

So we are a step ahead. to this. Current system requires you to go and learn about how things work.

Right.

So let's say if you have credit cards, then the current system requires you to learn like, hey, how to use cards, how to use rewards. And there are like 14,000 different credit options to a consumer. There are thousands of places where a consumer needs to go and learn about that stuff, including YouTube, blogs, TikTok. So it's like Consumer is confused with like this, you know, information flow.

Yeah.

At Bonn, what we are doing is rather than training consumers, rather than asking consumers to learn, we have built AI agents that learn on behalf of consumers, right? So our AI agent has already learned everything which is related to consumer credit, credit cards, student loan, personal loan, mortgage, auto, So consumers don't need to learn anything. All they need to do is just come and ask our agent to do the task for them. So let's say they have a card, they can ask like, hey, where should I use this card? Or like, what are the best things I can do with this card? Give me a plan to get out of debt with this credit card. Our AI agents will do the rest. So they don't need to learn like, hey, how to manage this card. Agent is managing that. They don't need to worry about like, hey, What is the impact of utilization? Because our AI agent has already learned it and actually not just giving information to consumer but also acting to help consumer on whatever task they want to use our platform.

Right. Well, the reason why I'm asking about these pieces of information, because if people don't learn, the agent, the AI agent will be some sort of a an agent which is dealing with not prevention, but also with the cause, always with the cause. The person who wants to buy a luxury car and now the agent is helping him or her to get out of debt, the next decision will be to buy another luxury thing. It's not because of the AI agent, it's because the person is not well educated on that.

Yeah.

I could make a little comparison. Back in the days, we didn't have GPSs, we used maps.

Yeah.

So, with some time, we would know Where to drive without the map?

Yeah,

now we have GPS.

Yeah,

take it away from us. Can we, can we get to this office? Yeah, from Palo Alto? No.

The

same thing with AI. I see a lot of positives with AI.

Yeah,

James Cameron starts using AI to improve efficiency, not to get rid of people.

Yeah,

so there are a lot of positive things.

Yeah, yeah,

but how about people just stopping using their brains and becoming dependent?

Yeah, so, um, of course people will use their brains in more productive things, right? Like, you don't need to stress about, like, think a persona of a consumer, right? Okay. Think of Michael who works at Starbucks, right? He had a decent education, he makes like $50,000 a year, then he spends on groceries, you know, food, travel. He has like $3,000 in credit card spend, rent, everything, right? And he's having multiple cards, he drives a good car, so he's auto loan on his car, he also has some student loan. So there are like 5 loans with Michael and on different dates, on different payment schedules with different minimums, right? His paycheck comes twice a month and he's so busy in life that he's not able to keep track of that.

Right.

Right? So these important but boring tasks can easily be done by AI. Where Michael should focus regarding using his brain is like, how can he use technology and things he needs to learn to accelerate in his career, you know, to have better health, right? Not to stress about things that actually take energy out of him.

Okay.

Right? Like nobody in the world can learn everything about, you know, finance or read like 15,000 different options, right? AI can do that overnight, right? So of course, like they need to understand like, hey, they can't keep buying stuff and keep going in debt again. And as you talked about, you know, buying a fancy car— if you don't need fancy car, you don't need to buy it, right? So, uh, so yeah, our AI will actually tell you. Let's say if you have 3 cards and you are already applying, uh, our AI agent will tell you like, hey, this is gonna impact your credit score. If it impacts your credit score, this is the output. You'll have a higher interest rate, you will be accumulating more debt, right? So this is a signal our AI agent will give to that consumer.

So please correct me if I'm wrong, uh, what you're saying is, uh, we are able to, to share with AI agent that, hey, I would like to buy this, uh, I don't know, Bentley.

Yeah, yeah.

And then the agent will say, well—

Exactly. So depending on your financial situation and your credit profile, our agent will tell you like, hey, is this the right time for you to buy it or not? And if you want to buy, how it's going to impact your financials. So it will give you a complete scenario like post-purchase. This is how your life will look like. This much debt you will have, this much income you will require to pay it off, this much interest you will accumulate. Right. So if you want to buy this fancy Bentley, go buy it. But once you buy it, this is how it's going to impact your life. Right. So it's, it's a more informed decision.

Right.

Rather than like consumer just feel excited about spending, right? And they don't know how it's going to impact their life, right? But agent knows like, hey, you have this much money in the bank, right? You don't have any emergency fund, right? So first build emergency fund if you want to buy, you know, a high-ticket item, right? So at least have a 3-month or a 6-month or 12-month emergency fund. Keep that aside or invest it somewhere. And then you go and spend if you want to.

Right. What other part of my little homework that I've done, I've spoke with a few financial advisors.

Yeah.

And what I see, another benefit of working with the AI agent versus a human, is that AI agent can get unlimited sources of information.

Yeah.

From all the banks and all the offers from the banks, which for a human could be a lot more challenging. And then the algorithm works.

And not just like unlimited information and algorithm, but also the emotional part. As I talked earlier in our conversation, most people are not comfortable opening about their finances even to financial advisors. So they will hide something related to their, you know, maybe it's because of their insecurities or whatever the reason. But with AI, they can be open as much as they want. Because that's a huge trust compared to a human. Maybe the same advisor is advising their brother or their parent, and that insecurity is always there, like, hey, he's our family advisor. If I tell him about my debt situation and I got fired from my job, he might tell to my parents or my sibling. So I'd rather not tell him. I'll just ask you basic questions because, you know, my friend referred or my father referred. But with AI, they don't need to do that because they know, like, you know, it's one-on-one conversation.

Right.

Right. Previously it was like many versus one, but with AI it's one-on-one.

Yeah.

Right. That CPA is not giving same attention and focus to every customer.

Yeah.

Because that depends on his mood or like the profile of the customer. Right. Some customers might have huge debt. That means you know, they will get more commission if they help that person to come out of debt, right? But whereas AI is pretty open and transparent, you know, it treats equally. It's open and safe space for people to come and have conversations.

That's really interesting that people start trusting AI a lot more than humans.

Yeah, I think so.

I've seen that happening. Yeah, you know, it's just fascinating to me that we tend to trust a machine.

Same, same. Like, uh, you are in San Francisco, you will see a lot of Waymo, right?

Yeah.

Uh, any given day, young people here trust Waymo than any other transportation or human-driven transportation, right?

I would never use it. I like to be in control of it.

I know, like when you drive, but when you are driving with someone else, right? Like you need to go from place A to place B.

Yeah.

Right. The other person like might be talking on phone or, you know, maybe drunk or you don't know. know, and maybe it's not safe to drive at night with a person, right? So that's what the problem Waymo solves, right?

Right.

It's fully secure. It's your safe environment, right? And Gen Z loves it, right? So there was— I was just looking at the data that majority of young Gen Z or Gen Y, whatever the, you know, the next generation is, majority of teens are using Waymo over weekends, right? So majority of traffic to Waymo As, you know, like these teens who are in high school or just graduated. So

that's pretty fascinating.

So we are already seeing a proof where people are trusting AI, right? Same we see with ChatGPT.

Yeah,

right. Rather than trusting an external source on any educational content, people are directly going to ChatGPT and asking their, you know, like anything related to their studies, especially in young people. Yeah, right. So they are not asking their sibling or a friend to teach them how to solve a math problem. Yeah, they directly go to ChatGPT and ask them.

Yeah,

we are seeing a huge adoption among our engineering teams as well, right? So to write code, they trust AI. It's faster, it's more confident, right?

What I've also learned about ChatGPT in particular is that it does make a lot of mistakes. You still have to check on it.

Yeah, sometimes, you know, it's like they are learning, but once they learn, it's really safe, right? So of course, like every technology, when it's early, you know, there are mistakes, right? But I think though, but still better than a human, right?

Well, you would know better. I'm not an engineer. I'm learning from you right now.

But there are some areas where you'll always trust a human compared to a machine. Right. For example, let's say there has to be some operational error. Let's say there is a manufacturing unit, you know, if a human makes an error, you're gonna punish that human, right? Maybe not that much, but if AI makes that error, you'll close that product or the software, right? Think as accounting, right? Right. You have an accountant, and if your accountant makes an error, You might have some argument, but you'll settle down quickly. You're not gonna fire that, right, that person. But if AI makes that mistake, you'll immediately fire AI, right? So we are still more emotionally attached to humans compared to AI.

But if people, especially the younger people, younger generation, they tend to trust AI more than humans, would it be the same?

Not in everything. Like in some areas they really trust AI, right? Like finding some information, they'll always trust AI. Right.

Even personal questions.

Oh yeah, yeah.

The boy doesn't like me or whatever.

Because it's a safe space. That's the reason, you know, they are more comfortable for personal questions.

Yeah.

Right, because outside AI there is no safe space, right?

Yeah.

Credit is one example.

Yeah.

Like, how many times you have seen your friends or family members came to you and talked about debt? They rarely do. Right. They go to Google. Previously, they used to go to Google and search for information. Now they do ChatGPT, and in future they will do, you know, like CreditGPT, come to Bonn and chat about their finances without stress, you know, without worrying and without being judged. So it's a safe space for people to come and have that conversation openly about their money, about their debt. about their finances, what's worrying them,

right?

Right. They can talk anything related to money and bond,

right? Another thing which I've learned about ChatGPT, and I wanted to ask like a parallel question, uh, one of the previous versions of ChatGPT was developed more to look or to sound more emotional, and the newer version was a lot less, more Colder, let's put it this way. How do you design your agent? Would it be more human-alike, more emotional, or more strict, straight to the point, and, you know, colder?

So our agent is designed in benefit of consumer, like what is good for consumer, right? Uh, somewhere we have to keep a balance between argument and emotion, right? Right.

How do you keep the balance?

So you keep that balance like, hey, for example, you want to buy Apparently, right?

Right.

So the agent understands like, hey, this guy is having, you know, aspirational demands, but when you look at the income, it's not matching the aspiration, right? So that's where the agent will not get emotional, right? But rather agent will get more analytical and practical like, hey, your income is $50,000 a year, you have $20,000 of debt, if you buy another, you know, I don't know how much, maybe a couple of hundred thousand dollars to buy a brand new car, you will be in this much debt and your profile is going to be even worse. So don't do that. But let's say, you know, someone wants to go to Harvard for college or Stanford for college and do their master's. That's the aspiration thing. But of course, it comes with a cost.

Yeah.

Right. So our agent will say like, hey, this is a good return in long term, so let's help you and prepare you for that expenditure, right? Because it's gonna pay you back, right? Right. Maybe like in AI, it may not pay back, right? Because you can learn a lot of things even without going to an Ivy League, right? But that's the scenario where agent will get emotional and will think about like, hey, You know, if you do this thing, it was gonna be really helpful to you, right?

Right. Taking this example, if a person takes a loan to get to Harvard, it could be in a way considered investment because you might get a better job or a better business because of this environment, not necessarily the knowledge. Now, if someone wants to buy that Bentley and your agent says, I wouldn't do that if I were

you,

and then the person responds, well, I want to get this Bentley so that, for example, on the weekends I can do a service business, service some high-end clients from SFO to San Francisco or whatever.

Yeah. So, that's not for personal consumption. That's a whole different segment. Like, you want to do a gig job, you know, maybe someone will build an agent for finding the best gig jobs and, you know, like monetizing those in a way that you don't get into debt, right? So, yeah.

Well, you get in debt anyway if you finance it.

Yeah, but again, you know, there's a business model to pay off that debt. When you buy an asset which is not actually an asset, in this case, like a car, it's a liability, but it's also a necessity. Right. You need to move from point A to point B and you need to save time. So you need a car.

Yeah,

right. So if you want to buy something very expensive, but just for your personal use, you can buy if you have like $5 million in bank. Right. But you have $50,000 and you are aspiring to buy a half a million dollar worth of liability, it's not a good financial decision anywhere.

Right.

Right. Of course, if you, like as you said, if you can turn it into a gig job that earns you, you know, $40,000 a month, you know, you go to these exclusive parties and, you know, help people to go to airport and, you know, blah blah, you can make, you know, you can turn that liability into asset. But if it's not earning anything to you, then it's a huge, huge liability.

Right. But if it's earning, right, if it's—

Yeah, if they can make more money than their monthly EMI, I think it's a— then it's a good business, right? So you pay $30,000 to Bentley every month, another $5,000 in your expense and fuel and gas and everything, insurance, and you take home another $15K or $10K by that, then it's ass.

Right, right. My last question for this introductory episode, how did you work on development of your agent? If we could break down roughly stages of its development, of the learning process of the agent, which were these steps, if you may?

So first we looked at the types of debt a consumer is having. Right. So there's credit card debt, there's home loan, there's auto, there's student, there's personal, and then there are miscellaneous loans as well. So we decided, okay, let's train our agent one by one. So the first area we focused was credit card debt. The reason we focused on credit card debt, because it impacts maximum number of people. Like, there's more than— to be exact, it's like close to 103 million Americans revolve their credit card balance month to month. Right. So that's a huge number. Yeah. Right. And it's very easy for young people to get into credit card debt, right? Because it's easy to get a credit card first, right? Compared to a home loan, right? Yeah. And that's where, you know, we decided, okay, we need to build an agent who learns all types of debt, but let's start with one, right? And then we got deeper into understanding like why people accumulate this credit card debt. What are the factors that are impacting credit card debt? So there are 2 big factors that impact credit card debt. First is timely payments. Last year, Americans paid close to $15 billion in late fees. That's huge money. They paid like total $200 billion plus in interest and late fees, right?

Yeah.

That's huge money, $200 billion plus in interest and late fees.

Well, banks made a lot of money.

So paying bills on time is very, very important, right? Second thing is your utilization, you know, and I have personally experienced that when I had limited knowledge about credit cards like a decade ago. I had idea that I have to keep my utilization below 30%. And most people don't do— like, don't know about this, especially young people, right? Right. So they overutilize their credit card debt and boom, you know, it impacts their score. And then there are a few other things that people don't know about, you know, like that impacts their— you know, one is like keeping no track about spending, right? They have 5 cards, they will spend on all 5 cards and just pay the minimum. So there is no payment plan. They are not planning anything related to their payments, right? So they only do the minimum and put everything remaining balance on like, hey, I have the 0% balance transfer, you know, so I don't need to worry about 12 months. I'll only pay minimum and save, you know, remaining balance to have fun. They miss one payment and the terms and conditions change, right? Yeah. And then there is 28% APR. So that 0% interest rate is now 28% because they just missed one payment.

Yeah.

Right? So these are the factors we trained our model, like, hey, these are the reasons a consumer will go into debt. Make sure a consumer never do those things.

Yeah.

Right? So his bills are always paid on time, his utilization is below 30%, and they don't apply for multiple credit at the same point. So we also build an agent that gives you scenario like, hey, what happens if you apply for a credit card, how it's going to impact your score. So the agent will tell like, hey, if you apply for a card, it might initially hit your credit score by 5 to 10 points, but it also brings $5,000 or $10,000 in credit limit increase. Yeah. So once if your credit limit increases, it helps your It helps to boost your credit score. So that's good for your credit score, right? So we trained our agent on all these parameters so consumers don't need to learn. Right. And the same thing then we did with personal loans, and now we are going with student loan. And, you know, by the end of next month, we'll also train our agent on auto and mortgage, right? So agent will know pretty much every kind of debt. what consumers should do and should not do, warn consumers. So yeah, that's how we are training our agent.

Wow, well, that's fascinating. The whole AI world is really fascinating, and I thank you for bringing it for good of the people, especially the younger generation. They need this help.

Yeah, yeah, definitely, you know, and the best place for young people rather than going to CPAs or ChatGPT or to their friends and family It's just to come to bondcredit.ai and let AI do the job for them.

Yeah.

All right. Yeah, let AI work for them. AI is good and Bond is making that reality happen.

Definitely. Well, Samda, thank you so much for coming, uh, to the episode, sharing about your invention, and we're definitely looking forward to recording with you again.

Thanks, Victor. Thanks for having me. Yeah.