Dave CEO on trends in digital banking during COVID-19

Digital only bank Dave provides services to customers including budgeting and assisting with building better credit. Dave CEO Jason Wilk joins The Final Round to discuss the company model and what customers are concerned about in regards to COVID-19.

Video Transcript

JEN ROGERS: When's the last time you went to the bank? Bet you have to think about it, right? When's the last time you went to go get gas? It was a long time ago at this point. It was weeks. I mean, we had the stories about people going to the bank to take out cash, really, at the beginning of the pandemic. But since then, I don't think a lot of people have been spending too much time at the bank.

And that might actually be good news for some companies, including the next one we're going to talk to you. I want to bring in Jason Wilk. He is the CEO of Dave. Dave calls itself a challenger bank in here. For those people that are not familiar with Dave, Jason, can you tell us what Dave is and what your business has been like over the last two months?

JASON WILK: Yeah, sure. Hey, great to be here. Dave is banking for humans. We are a challenger bank on a mission to put America's financial minds at ease. 75% of stress in America is caused by money, and a lot of that is due to the overdraft fees that are charged by the big banks. We call the company Dave because it's named after David verse Goliath.

We are going up against big banks and the $30 billion of overdraft fees they make per year. We, here at Dave, have really tried to reinvent overdraft, giving people $100 of free overdraft cash instead of charging the $34 fee, like the big banks. We have six million customers that have used it, and over 30 million times, our customers have used this overdraft service. It's huge.

We also help people avoid fees by predicting their upcoming bills and expenses. We use machine learning to text you about your water and power bill, or your grocery spending, and really let people know in this country how much they have available to spend.

Well, what's been the most popular feature so far over the last couple months through COVID is we have a job board to help people find side income opportunities. And we call that service Side Hustle. And 500,000 people per quarter are using that to find jobs, like dog walking or food delivery, whatever it takes to make ends meet right now. We've seen a huge surge in people not wanting to go to a bank and start working with a mobile banking product, like Dave.

ANDY SERWER: So Jason, you know, you guys are a fintech company. I think it's fair to call you that. And there are a lot of them out there. So my question is, you know, how are you really differentiated enough so that Mark Cuban, and I think, what, SV Angel? Was Ron Conway an investor, as well?

JASON WILK: That's right.

ANDY SERWER: Yeah. So I mean, what do they see in you that they don't see in all the other guys?

JASON WILK: So we've had this real crisp idea that we want to help the 90% of people in this country who are not satisfied with their current bank. And I think Dave, starting three years ago in 2017, launched with the idea that people are not satisfied with banking because they pay too much in fees, and the bank doesn't use any of their data to help make them better at financial management.

And so when we started the company, it was actually this very simple tool that would text you about your bills and give you an extra $100 to avoid an overdraft fee. And now we've morphed that into a full-on challenger bank to compete with the big banks directly as we realized, even with our current core service, we still can't help people avoid all fees. So that was the real differentiator in the beginning.

The story of Dave, and David verse Goliath, really resonated with the investors early. And we've seen a surge of new competition coming in, but Dave really was the inventor of a lot of these modern-day services that we're seeing.

AKIKO FUJITA: Jason, you know, when we talked about Dave, we sort of set this up as a millennial play, right? A lot of-- I imagine your customers tend to veer a little younger. But you talked about some of those tools that you've put in place as a result of the coronavirus. And certainly, a lot of people looking to save money in any way possible right now. How has your customer profile changed over the last few months? Have you seen a dramatic shift?

JASON WILK: We've seen the same type of customer, but we've seen a dramatic shift in how they use the product. So we've now seen our job board become increasingly more popular. We have a 700% increase in people applying for work through Dave, which is really interesting to look at. We can also see, obviously, our users' transaction data, and we see quite a big decrease in people's spending behavior. Consumer spending is definitely down, as they're not going out to bars and restaurants like they typically were pre-COVID.

RICK NEWMAN: Hey, Jason. Rick Newman here. So how do you make money?

JASON WILK: So we make money from the card networks. Just like Visa and Mastercard pay Chase and Wells Fargo, every time somebody swipes their Dave debit card, we make a percentage of that from the networks. That, we hope, to be the primary driver of the revenue. We also, instead of charging fees on the $100 of free overdraft cash, we ask for an optional tip.

Because this customer is used to paying $34 in fees to their bank, on average, about 50% of people give us an optional tip, which is pretty unbelievable.

RICK NEWMAN: Do you make any money loaning people's money that you are holding-- traditional banking?

JASON WILK: We do not. So until we become our own bank and have our own charter, we would not be able to lend out the deposits. We store our money in an FDIC-secured account that is safe for the customers.

ANDY SERWER: So you're not really a bank yet because you don't have a bank charter.

JASON WILK: Yeah, that's right. We don't have a bank charter, but we consider ourselves a challenger bank, and then we are amassing checking customers. But the difference between us and a JP Morgan is that our deposits sit somewhere else in an FDIC-insured account.

ANDY SERWER: So yeah, it's like Jamie Dimon here, Jason Wilk there. I can see, there's a little difference, right?

JASON WILK: That's right. That's right.

ANDY SERWER: So let me ask you this, then. How are things going, Jason, during this time of coronavirus? I mean, it's sort of been eight weeks, I guess, right? How's business?

JASON WILK: Business has been strong. I mean, just like a lot of the companies you're talking about on your show today, we've seen a pullback in our marketing spend, as we're really curious to see what consumer sentiment looks like through this time. But interesting enough, we have not really seen much difference in people's interest for this product. If anything, we're seeing more people want to take advantage of some of our features.

So you know, we've slowed marketing to see how the state of the world was going to be, but we're actually ramping things back up to normal starting Monday.

JEN ROGERS: You're ramping things back up to normal in terms of your marketing spend?

JASON WILK: Yes.

JEN ROGERS: Huh. OK. Interesting. Before we go, I wanted to ask-- if you've been listening to us, we've been talking about negative interest rates. I know you said you're a challenger bank. Does that matter at all to you? Because we had the financials down today 3 and 1/2% because they can't really make money that way. But you're not a traditional bank, so is it even something you think about?

JASON WILK: We do make a small amount of money from interest rates from the Fed. And so that is something that we will look to as a revenue generator, but it's not meaningful enough right now to make a big impact on the company.

JEN ROGERS: All right, Jason Wilk. The challenger bank is called Dave. Thanks so much for coming on and talking with us about it.

JASON WILK: Hey, thank you guys. I really appreciate it.