New neobank to list on the ASX and challenge the Big 4 ASX banks

Neobank Douugh is going to list on the ASX, should the Big 4 ASX banks worry?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Neobank Douugh is looking to list on the ASX, which would mean it would be the first neobank to hit the Australian Stock Exchange boards.

The Australian Financial Review has reported that Douugh, which has only be operating since early 2016, is looking to list. Founder Andy Taylor has made quick progress with the business – he was also a co-founder of Australia's leading peer to peer (P2P) Lending platform SocietyOne.

The idea of Douugh is that it uses a 'virtual assistant' called Sophie to help with managing money with insights and recommendations. The app allows you to do your normal banking needs, set spending targets and set up 'savings jars'.

The Douugh listing is on course to happen in around a month from now with the company waiting to raise $10 million from the listing.

At the moment the difference between Douugh and other neobanks is that it links with other deposit-taking institutions and use their banking licence whilst still being able to offer full bank accounts.

Whilst the transaction account is free, it will also offer a premium subscription where customers can invest in low, medium or high risk assets with shares and treasury bonds.

The business won't be launching its local offering until next year due to the open banking delay to February 2020, but the US is the first place where it will start. But it has no intention of selling debt or operating a large balance sheet. That sounds like a wise idea to me. 

Foolish takeaway

Over time the large amount of challengers to the big banks of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ)  could see a sizeable decline of earnings for them as competitors nibble away at the edges.

With so much new competition, I think profit growth for the big banks will be sluggish at best.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Bank Shares

A corporate female wearing glasses looks intently at a virtual reality screen with shapes and lights representing Block shares going up today
Bank Shares

Are Westpac shares a buy following the bank's big tech update?

Is now a good time to buy the banking giant's shares? Let's find out.

Read more »

Different Australian dollar notes in the palm of two hands, symbolising dividends.
Bank Shares

Own CBA shares? It's payday for you!

A dividend is heading to CBA shareholders’ bank accounts.

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Bank Shares

Are CBA shares really worth $120?

It has been a good year for ASX bank shareholders.

Read more »

a group of people sit around a computer in an office environment.
Bank Shares

Westpac shares push higher on $9.8b technology simplification plan

Westpac plans to spend big on technology to close the gap on its rivals.

Read more »

A worried woman looks at her phone and laptop, seeking ways to tighten her belt against inflation.
Economy

NAB boss issues dire prediction for Aussie economy

NAB’s CEO has issued a stark warning on the outlook for Australia’s economic growth.

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Bank Shares

Own CBA shares? Here's the tech stock the banking giant just invested in

CBA has made an interesting investment. Here's what you need to know.

Read more »

A woman gives two fist pumps with a big smile as she learns of her windfall, sitting at her desk.
Bank Shares

ANZ shares charge higher on $57.5 million class action settlement news

ANZ shares have continued their positive run on Monday.

Read more »

Two people comparing and analysing material.
Bank Shares

Better buy: CBA or Westpac stock?

Which ASX bank share is a better buy?

Read more »