Douugh Ltd (ASX: DOU) is a fintech company that collects consumer banking data which then results in tailored ongoing financial coaching, mentoring and guidance to the user. The company recently completed its $18 million inital public offering (IPO) at 3 cents per share and more than doubled on its ASX debut on Tuesday. It currently operates in the US with intentions to launch into Australia and international markets. As an exciting fintech play that aims to disrupt the traditional global banking system, could the Douugh share price emerge as an ASX tech share unicorn to buy?
How is it different from a bank or neobank?
Douugh is different to existing Australian neobanks such as Xinja, Up Bank, Volt and 86 400 as it is not a licenced bank. It has however secured two banking partners, one in the US (Choice Bank) and one in Australia (Regional Australia Bank), enabling it to accept deposits and issue a bank account guaranteed under the Australian Government's Financial Claims Scheme. This business model means that it is not forced into operating a traditional balance sheet model which typically relies on price competition through deposit and lending products. Instead, Douugh operates as a software and services business, charging end consumers fixed and variable fees.
Furthermore, Douugh has also signed a long-term, strategic innovation and marketing partnership agreement with Mastercard, initially starting in the US and Australia to assist with growth. This agreement allows Douugh to issue a Douugh-branded Mastercard debit card via its bank partner, provides significant marketing support to each country and early access to new technology licencing and collaboration opportunities.
How will the company make money?
Douugh is currently executing the first phase of its growth strategy, offering a smart bank account and debit card offering that is powered by AI driven insights and money management features under a subscription model. Its customers can connect existing bank accounts and credit cards to get a single view of their balances. It aims to expand on its product features by converting to a paid subscription offering that will incorporate the following:
- Wealth management
- Cashback rewards
- Credit score monitoring
- International remittance
- Access to product marketplaces
In the long term, the company aims to transition into SME banking and offer integrations to key accounting platforms such has Xero, Quickbooks and MYOB. It also intends to expand into other key international markets such as Europe, Asia and South America.
Is the Douugh share price a buy?
The company is in its infancy and will likely require additional capital in the future to expand into international markets, grow its product suite and acquire market share. I do however, admit that it has a refreshing approach to traditional banking with a roadmap for additional features in investing, open banking and tapping into the SME market. There are significant risks in investing in such a small company, but Douugh could be onto something.
