Having overseen a meteoric share price rise after its debut on ASX this month, Douugh Founder & CEO Andy Taylor remains sanguine, and focused on his upcoming US launch.
Where from, to here?
Taylor is a long-term entrepreneur, having founded, run and sold a digital marketing agency in his native New Zealand all the way back in 2004. Even then he was into banking — one of the agency’s first big client’s was CBAs subsidiary ASB, with Andy and his team crafting their social media plan that launched them into Facebook for the first time, becoming the first bank in the world to build and launch a FB app dedicated to allowing customers to bank through a ‘virtual branch’.
“The Facebook experience really got me thinking — global community based platforms will eventually dissentimediate the banking model as we know it through a new kind of business model” Taylor says.
This sparked the idea for Taylor’s first fintech venture, SocietyOne (Australia’s first fintech and P2P Lending platform), dedicated to helping people in the borrowing and lending of money, directly based on a risk based pricing model, without the need for a bank to be in the middle.
Ultimately, SocietyOne wasn’t as disruptive as Taylor had envisioned it originally. “To be disruptive, and to truly help people financially, which was what we originally set out to do, you need to be top of the engagement funnel for money — that means taking the salary deposit and managing transactional banking,” he said.
The concept of Douugh had been born in 2016, and Douugh originally started out in partnership with Suncorp’s Innovation Lab. “Those guys thought they wanted to become the banking-as-a-service platform, but as is often the case with big corporates, the cannibalisation risk and the desire to control the consumer end-to-end experience and manufacture traditional banking products really killed the initiative,” Taylor said.
“We went out on our own and decided to focus our attention on the US and partner with a smaller bank that shared our values and mission to help people live financially healthier.”
The Douugh App. Source: Douugh
Made for America
The US made sense to Taylor for a number of reasons.
“Firstly, the banking market structure there is a real tailwind for us — interchange fees, for example, are a really good revenue source for us from day one and are three times higher there than anywhere else. Also of course there’s a huge population, and while a huge swathe of high and middle income earners want financial guidance, the lack of financial advice available is staggering. Thirdly, you have an extremely digital savvy banking population crying out for innovative tools in a market where much of the economy is still run on cheques!"
And finally, the US is a bit of a mess in financial wellness terms. So all-in-all it’s an ideal market for us, and that’s proven itself in our beta which has been wildly successful.”
That beta comes to an end shortly, as Douugh rolls out its full US market launch. While the investment in technology has been substantial, Taylor says his company’s model means that all their funding has been able to be directed to building their killer app — not to regulatory requirements that other neobanks are subject to.
“Look, the neobank tag has been useful for us I guess because it’s something people see in headlines, but we’re not a traditional neobank because we are not a deposit-taking institution, manufacturing traditional banking products with all the regulatory and cost burden that entails,” Taylor said.
“Banking-as-a-service is our secret sauce and means we can focus our team of brilliant minds — and our funding — on what do what we do best. That is, develop AI solutions for individual financial data and find innovative ways to deliver them.”
US partners Choice Bank are also excited, Taylor said. “They’re a community bank that exist in their mind to serve customers, so they’re aligned with us perfectly. They’ve always been right behind the financial wellness aspect of what we’re doing, and they’ve been very patient but now they’re very excited indeed.”
To market, to market
Taylor says Douugh has a lot to show for the investments that have been made in it so far. “If I look at what we’ve raised and invested, we have a product that people who are already using it [in beta] love; we have an outstanding team; we have global partnerships in place and we have a market ready to go in the US. When I look at other neobanks, there are quite a few who’ve raised millions and have very little to show for it.
“Now we just have to prove we’ve got a product that people will use every day, tell their friends about and keep using over the long term. We believe in it, our partners believe in it and the investors who have been with us all the way believe in it. The market has been behind us so far but I’m not focused on day to day share prices — when you’re a small cap tech stock your price is going to fluctuate and that’s just a given. The day we listed at 3c we had all the capital we needed to launch our product in the US and really get our teeth into the next phase. So that’s my focus and that’s where my focus will stay.”
From America to the moon
Andy describes his long-term goals for Douugh as ambitious “We’re shooting for the stars. We have a ten year plan with Mastercard to build a global banking and wealth management platform and premium brand business. We want to be the Tesla of banking and I use that association deliberately. What is Tesla? Is it a car company? No. It is a software company and their key point of difference is their investment and lead in automation.
Judge us as a bank at your peril — we are here to build a fully autonomous banking and wealth platform. We’re probably a bit too early with that vision today because no one is ready, but it will come really quickly. Just you wait and see.”