Douugh, a fintech firm founded and led by SocietyOne co-founder Andy Taylor, has revealed that it has secured a wholesale banking deal with Regional Australia Bank that will support its planned launch into the Australian market later this year when it will offer full bank accounts.
Speaking with Mortgage Business, Mr Taylor admitted that Douugh aspires to be the “Tesla of banking” in that it wants to “pioneer a completely different business model to a bank that is focused on [improving] financial wellness”.
The fintech firm is building out its artificial intelligence-powered “smart bank account”, designed with the aim of helping customers manage their expenditure. A key feature of the bank’s mobile application is a personal finance assistant, called Sophie, who will “proactively” help customers by providing them with actionable insights at the right time so that they can make the right decisions in line with their financial goals – whether that is paying off debts, saving up for a product or event, or building wealth.
“If Sophie understands that you’ve got a power bill due on the Friday and you don’t have enough money to cover that, she can actually smooth out your cash flow. Maybe [she’ll] tell you to buy one less coffee a day. [It’s about] actually becoming a cash flow manager so you don’t miss payments,” Mr Taylor said.
“I think the problem with banks is they always look back, whereas we project forward all the time and give you an opportunity to make the best decisions in the now. ‘Here’s what it means if you buy that dress today’. It’s about giving you context.”
While it’s a “big trust jump”, the CEO said the long-term vision is for customers to allow Sophie to autonomously “manage [their] money in a way [they] could never hope to because [they] don’t have that level of insight and intelligence”.
Until then, Sophie’s role is to “help you consolidate debt, get your expenses under control, and then understand what your goals are and [create] a plan to help you achieve those goals.”
This is one of the reasons that Douugh was keen on partnering with a smaller, community-owned bank.
“Big banks are really focused on keeping customers in a debt cycle, which is made up of credit card debt… We have to replace the credit card – that’s what we’re on a mission to do. And the big banks don’t really want to change the way they do things,” Mr Taylor said.
“We like community banks because they’re really customer-focused, and they realise that to stay relevant and competitive, they really need to get behind fintechs. Regional Australia Bank is a perfect partner.”
The Douugh CEO further noted that the nature of the partnership means the fintech can maintain its independence.
Regional Australia Bank CEO Kevin Dupé told Mortgage Business that Douugh will provide “a contemporary front-end that can deliver helpful insights to a market who wish to take basic steps to better manage their money” while the regional bank will provide “years of knowledge and banking expertise to power the platform”.
“The benefit for us is that we will stay at the cutting edge, it also opens up the opportunity for us to partner with additional fintech companies in the future, as well as allowing us to diversify our deposits and provide another income stream,” Mr Dupé added.
While Douugh has no plan on offering mortgages in the foreseeable feature, Mr Taylor admitted that the company does have some ideas around how it could “disrupt” the mortgage market.
“Without giving much away, our plan for how we disrupt the mortgage market is [around] expanding the line of credit through a life… [The idea is] it’s constantly being readjusted based on your circumstances, so you always know where you stand. You’ve always got a price based on your risk [profile],” he said.
“I think [this is] how you give Millennials the leg up to get into [the property market].”
The agreement with Regional Australia Bank follows a global strategic partnership announced with Mastercard at the end of 2018 to be able to offer customers debit cards, as well as the launch of a $5 million equity crowdfunding campaign via Equitise, which remains live until February.
Douugh’s banking partner in the US, where it decided to launch its offering first, is Choice Financial. It also has open connections with 16,000 banks in the US, thanks to its partnership with fintech firm Plaid.
Mr Taylor said the fintech does not plan on applying for a banking licence in Australia at this stage.
“We don’t need to. The value is not in getting a banking licence. The value is in the customer experience,” he said.
Tas Bindi is the features editor on the mortgage titles and writes about the mortgage industry, macroeconomics, fintech, financial regulation, and market trends.
Prior to joining Momentum Media, Tas wrote for business and technology titles such as ZDNet, TechRepublic, Startup Daily, and Dynamic Business.