Neobank Douugh wants to take HENRYs from the big four after Regional Australia Bank deal


Douugh will manage the customer experience through its mobile app, while the account is issued by Regional Australia Bank and be protected by the government guarantee on deposits up to $250,000.

“It’s been very difficult and time consuming to find the right partner in Australia. We wanted to find someone who respected our independence, shared our values and capable of supporting our ambitious product and growth plans,” Mr Taylor said.

In December Douugh signed off on a deal with MasterCard, meaning it can offer accounts with debit cards, and Mr Taylor said the partnership with Regional Australia Bank was the “last piece in the puzzle” needed to push for rapid growth in a rapidly heating up banking sector.

As well as the big four banks, Douugh is the latest of a slew of neobanks, looking to take market share through easy-to-set-up and smartphone-based accounts.

Alongside Volt, Xinja was given a restricted licence in December and is hoping for a full licence midyear. 86 400, backed by Cuscal, and Judo Capital, will focus on business lending and Up has already launched accounts on a similar partnership model to Douugh, using the banking licence of Bendigo and Adelaide Bank.

“We do expect people to dip their toe in the water initially to test our technology and gauge the impact it will have on their daily lives,” Mr Taylor said.

“I think we will need to work hard to win the right to people’s salary deposits. We believe people will hold multiple bank accounts in the future, and the battleground is winning the right to the salary deposit and everyday expenditure.

“This is where the strategy of becoming the ‘financial control centre’ for our customers becomes very important.”

As well as its Australian plans, Douugh has already set up a similar arrangement with US mutual bank Choice Financial and will launch in the US before Australia. It is in the throes of completing a $5 million capital raising via crowdfunding platform Equitise, which Mr Taylor said was progressing well.

He intends to list Douugh on the Australian Securities Exchange later this year.

Mr Taylor has form for trying to disrupt the stranglehold on financial services of the big four bank, since his time at peer-to-peer lender SocietyOne. While his former company initially set out to knock the big banks off their perches, it ultimately progressed via significant financial backing from Westpac VC fund Reinventure.

“This feels very much like unfinished business, as I’ve always been driven to build a global consumer software company that structurally disrupts the status quo and offers consumers a better experience than currently on offer by the banks,” Mr Taylor said.

“We see much bigger potential for Douugh [than SocietyOne], as we are operating this as a global banking platform from day one.

“We truly believe we can scale to reach 100 million customers by 2030 and we are motivated to show the world that Australia can produce world class consumer technology companies.”

Regional Australia Bank CEO Kevin Dupé meanwhile said he believed the offering from neobanks like Douugh would be increasingly popular with consumers on the heels of the banking royal commission, which had highlighted the need for greater transparency and appropriate lending.

He said association with fintech start-ups like Douugh would help keep his 50-year-old institution nimble and he was confident that the market would respond well. He said Regional Australia Bank was already working with a number of fintech start-ups and would continue to look to the sector to help it grow.

“The benefit for us is that we will stay at the cutting edge without having to actually do all the work ourselves, these people are more nimble than us, but they will drag us along,” Mr Dupé said.

“There will be a high attrition rate and we may have to kiss a few frogs along the way, but we do expect that people like Andy stand a good chance because of their record, but it is pretty tough out there so we definitely will be working with others as well.”

Late last year the government announced the introduction of customer data sharing between banks and other organisations, such as fintech start-ups – known as open banking – would be delayed by eight months.

Product information and IT systems will need to be ready by July 2019. Card, transaction and mortgage data will be made available by February 2020.

Mr Dupé said his institution was relishing the arrival of the new regime, and saw it as a big opportunity to win market share off the big banks, as tech-led initiatives like Douugh gave more control to consumers.

“I think the reason this has been delayed is because those major banks are just sloths,” Mr Dupé said.

“The big banks are all frightened of each other … They don’t care about us. We aren’t worried about open banking because we are only 1 per cent of the market, so there is 99 per cent out there for us to go and have a go at, and we will.”



Source link Finance News Australia

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