Happy Thursday to everyone, we're almost to the weekend. I found this intriguing new article about Mark Cuban's new fintech app Dave that I wanted to share. In short, the article states that;
A new fintech app called Dave (portrayed as a cuddly, bespectacled bear) wants to help make those ridiculous overdraft penalties a thing of the past. Dave warns you when you’re going to blow your budget and will even lend you up to $250—with no interest—until your next payday.
The article goes on to mention that;
The Wall Street Journal reported last month that consumers spent more than $33 billion on overdraft charges in 2016, citing data from research firm Moebs Services.
And according to data from the app itself;
The average American pays $136 in overdraft fees a year
The cost of the app itself is $1 a month, and includes having to share your financials with the app. Unlike your local car dealership, it does not finance everyone. The articles notes that;
If things look a little too reckless, the bear will walk away. Dave looks to verify users have the income to pay back a loan—generally two or three months of income history is required to get approved. The company doesn’t pull credit histories so users won’t see an impact to their credit scores from using the app.
Also, the app uses your history plus financial history to predict when you might need a loan. Lastly, another source of revenue for the app itself is, well believe it or not; tips. Yes that's right, the app provides you the option to tip once you've paid off your loan. Although they do stress that is voluntary and not required at all, they even claim to help plant trees with a portion of your tip.
Personally, I don't ever get charged overdraft fees because I'm quite anal about my finances. Though I could imagine there are quite a lot of people who need this (Referring to the fact that consumers spent more than $33 Billion on overdraft charges).
Questions: 1. Do you believe that this new app could actually be profitable? 2. Would you use this app?
This seems a little too niche but I guess I don't know what the data is on the demographics of people who deal with overdrafts
Niche yes, but $33 Billion in overdraft charges seems like a good market for the app to tap into. Besides that one fact, the article doesn't anything else.
I feel like the people who would preemptively purchase a subscription to minimize overdraft fee costs would mostly be too reckless for this app to loan to. That's just my guess anyway.
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