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Neobank Douugh (ASX: DOU) is the first of its kind to list on the ASX after debuting this morning following an oversubscribed $6 million capital raise.
Founded in Sydney by CEO Andy Taylor (pictured), the company is one of many next-generation 'neobanks' established to disrupt traditional means of banking and target Millennial and Gen Z customers.
The company's core product is its AI-powered smart phone app and bank account that the company hopes will allow its customers to take control of their financial wellness, helping them save more and spend wisely.
The debut on the ASX comes just weeks before the group is set to launch the app in the US, with an Australian launch to come in 2021.
Douugh is one of many Australian neobanks on the market, joining established players like Volt, 86 400 and Xinja.
Taylor, the founder of P2P lending platform SocietyOne, says Douugh is an evolution of the neobank concept, taking it beyond just simply rebuilding a banking platform on a slick-looking app.
"Most of the well-known neobanks are just rebuilding the same old banks in digital form selling traditional products competing on price, reliant upon getting their customers into debt to turn a profit while outsourcing their software development," says Taylor.
"This is an incredibly capital-heavy approach and I'm not sure, in the end, how 'neo' it really is or whether it resonates with the Millennial and Gen Z target market.
"Our research shows that money management is the fundamental problem that needs solving in banking and that calls for a new kind of business model."
The company's banking platform utilises the banking licences of its partners to deliver core banking services; in the US the banking platform is Choice Bank's, while Regional Australia Bank will power Australian bank accounts.
While customers will have access to a Mastercard-baked bank account, Douugh hopes to attract customers with its financial management prowess.
Douugh sorts users' monies into categories called "jars", putting funds away at payday for bills and user-made savings goals for things like holidays or that new couch they've been eyeing off.
The company's imminent US launch follows entering into a partnership with Mastercard in 2019.
Taylor says the choice to list before its launch was made to capitalise on the strong growth opportunity in the US before launching in Australia and beyond.
"We will use our IPO funds to scale up our US customer base and continue to invest heavily in R&D to improve our AI-driven banking platform," says Taylor.
"We are laser focused on helping people better manage their money, with our long-term goal to become a fully autonomous financial control centre for our customers, which may eventually see us expand into SME banking."
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