Innovation

Dave: Banking for Humans is an interactive and personalized banking app that disrupts alternative finance solutions for individuals. Within the app, Dave helps an individual receive small advances on an upcoming paycheck and then pay it back when the paycheck arrives. In addition to this service, Dave excludes any overdraft fees, minimum account balances, and ATM fees. Already, Dave is positioning itself in a competitive advantage over other industry leaders in the alternative finance solutions space. What sets Dave apart from other alternative banking apps is that it is personalized to the individual. Dave serves not only as the bear in a logo but as a trusted advisor for the individual. The app offers various resources available within the app, such as automatic budgeting and a side hustle feature. Dave also provides those with little to no financial literacy the ability to start building credit and allows individuals to report their rent payments to major credit bureaus.

Dave is almost like a human in a way in which he builds that feeling and sentiment that he is a financial best friend. The app is changing the way individuals bank and larger financial institutions choose to run their businesses. Dave is committed to positive social impact at such an early stage of the company through their app. Along with its founders, the app strives to remain self-aware of the many social and sustainable impacts they make by maintaining transparency.

Inspiration

Three friends founded Dave: Dr. John, Jason, and Paras, who were dissatisfied with their banking experiences. The common thread amongst them was their contempt for overdraft fees and the frustration that came with the lack of transparency about how much money remained in their accounts before payday. This problem became personal when one of the founders bought a cup of coffee that ended up costing him $38 because he was charged an overdraft fee. After realizing that “more than 25% of Americans overdrafted in … [a] year”, they realized something needed to change. After also noticing that “customer loyalty at big banks [was] at an all-time low,” they decided to develop a financial institution aimed to serve the financial pains of 99% of Americans instead of only the top 1%. As such a small and up and coming player in the financial industry, they developed their name, Dave, because they saw themselves as “the finance version of David vs. Goliath.”

Instead of aiming to build a competing bank, they first focused on solving average everyday problems such as overdraft fees and budgeting issues. As a way to “outsmart overdrafts,” they developed their first product that warns consumers before an overdraft and spots their clients up to $75 without interest or previous credit checks, with the tagline “just pay him back when you get paid.” This aligned their brand as “one of the people,” and they gained millions of members through this. “Today, Dave has reinvented many other areas of finance, from no-interest cash advances, income creation, un-bounceable checks, and more to truly take on Goliath,” all while remaining customer-centric, transparent, and resourceful to promote constant innovation. Through Dave’s mission, “Creating financial opportunity that advances America’s collective potential,” they are differentiating themselves as an unparalleled financial institution to watch.

Overall impact

A financial friend to the millions of Americans who use the app, Dave helps with budgeting, building credit, finding work, and accessing money to cover immediate expenses before a user’s payday. They offer customers an advance of up to $75 to cover their expenses. Instead of mandatory fees, Dave lets users pay what they think is fair through a ‘tip’ based model. This system allows users to avoid paying hefty overdraft fees through their bank and will give them a clear insight into how much money they are left with before payday arrives. Beyond that, Dave Banking is the first checking account to report regular rent payments or utilities to the credit agencies to help automatically build users’ credit for free. Expense forecasting for customers is also a great benefit in staying up to date with their finances. With Dave Banking, users can access Dave’s AI expense forecasting tool, predicting their account balance before their next payday and sending helpful texts and alerts when they’re in danger of dropping below $0.

Large banks do not intend to cover and service most Americans, which is a substantial financial stressor and problem for many people. Security and stability are necessary for all, which is why Dave is the next great financial institution of our time, one that could service 99% of Americans, not just the 1%.

We all could use a little extra cash in our pocket, and Dave gets that. Through the app, Dave connects customers with local, flexible jobs that fit into their busy schedules. This job marketplace within the app has integrations with a dozen gig-economy companies such as Uber and Instacart. To help make things even easier, network partners through the app allows users to apply for work right from their phone, giving them access to 20 different types of part-time jobs in their area. Having proven to be successful, $140 million in additional income has been created, as well as new employment opportunities for tens of thousands of Dave customers through this incredible job feature.

Business benefit

One of the most important missions of Dave is to create equal opportunity for everyone. Dave wants financial security to be accessible to all, which is one of the advantages of an app that can be used anywhere. One thing that Lauryn highlighted during her interview is the racism and classism that exists in the banking system. There is often a severe lack of banks in inner-city communities, disproportionately affecting both black and brown communities. The idea with Dave is that there is no need for a physical bank to perform banking functions. This allows those who would not typically have access to a bank in their community to still have the tools they need to manage their money effectively. To further promote their ideals of diversity and equality, they pay special attention to their advertisements and ensure that they show a wide variety of people, hopefully appealing to their users and showing that banking should be accessible and available to everyone.

Beyond this obvious emphasis on equality, Dave also recognizes that many of their users have primary languages that are not English. Because of this, they have ensured that their app can be used in multiple languages, again ensuring that anyone can access and use their app and have online banking at their disposal, even if they do not feel comfortable going into or do not have a physical bank in their area.

Social and environmental benefit

Dave’s competitive advantage is its customer service. The entire business model is creating simple and advantageous banking solutions for customers. The industry is rife with competition, but this approach is unique. Often this space is crowded with profit-oriented individuals that take advantage of their customer base. Dave is redefining how hassle-free banking can be for their clients. It makes competitors meet that standard as well. The timing for rolling out this business could not be more perfect. With customer loyalty for big banks at an all-time low, customers are begging for an easier banking experience.

An act that highlights how paramount social responsibility is for Dave’s; they have partnered with Feeding America to help provide food to struggling Americans. The avenue of socially responsible banking is wide open. If consumer trends towards more socially conscious firms continue with the momentum it has picked up within the last year, more startups will follow Dave’s footsteps.

Interview

Lauryn Nwankpa, Head of Social Impact