Douugh launches with AI to help the affluent improve financial habits
Douugh, a challenger bank that encourages better financial habits among its customers, launched to the public on Monday.
Earlier iterations of the digital bank, which operates out of Sydney, Australia, and New York City, emphasized its artificial intelligence-based virtual assistant, Sophie. After beta testing revealed that users want more proactive notifications and insights, the app now uses AI and machine learning to analyze users’ finances and help them divide their money among spending, saving and eventually, investing, using virtual “jars” as sub-accounts.
For example, the Bills Jar helps users cover regular bills such as streaming subscriptions, rent and utilities. Douugh will flag upcoming bills so customers can set aside the required funds in the Bills Jar and pay bills using a linked virtual card.
“This card puts a behavioral barrier there so people know this is only for bills,” said Andy Taylor, founder and CEO of Douugh.
Everyone gets a Rainy Day Jar, with a target savings amount of $1,000. Users can also set up different Saving Jars for short-term goals outside of the checking account. When users spend money, Douugh will categorize their transactions and let them set spending targets per category.
For now, Douugh will recommend amounts for customers to set aside based on their income, and allow them to change these amounts. Later, the task of sweeping money into Bills and Savings Jars will become automated once Taylor implements his cash flow provisioning engine Autopilot toward the end of December.
“We’re going softly to full automation,” he said. “We need to build trust, so the steering wheel is still there, but we will guide you with recommendations.” But he believes automation is important because it will trigger actual changes in user behavior, rather than leaving it to them to take action.
In the future, an Investment Jar will incorporate wealth management into Douugh by offering up to five managed portfolios. Douugh is in the process of getting a registered investment adviser license from the Securities and Exchange Commission and will roll out this feature in the next six months.
Douugh raised capital by listing on the Australian Stock Exchange in October. Once Autopilot and wealth management features are in place, Taylor expects that Douugh will shift to a monthly subscription model and will add functionality over time.
Although the digital bank does not charge monthly fees or overdraft fees or set a minimum balance requirement, Taylor says his offering is different from existing neobanks such as Chime.
“We’re after a much more affluent customer, who wants more guidance and accessibility to securities to help them get ahead,” said Taylor. “Getting paid two days early is not necessary for this cohort. It’s more about changing behaviors and building a plan to live financially healthier.”
He also has no aspirations of turning Douugh into a traditional bank. Instead, Taylor plans to partner with financial institutions in each country Douugh enters. In the U.S., deposits will be held with Choice Financial Group, a $2.7 billion-asset institution in Fargo, N.D.