When’s the last time you went into a bank branch? Maybe it’s time to consider those friendly sounding financial start-ups.
Dave and his bros are having a moment.
A lesser-known player in the world of companies trying to displace basic checking accounts and other everyday financial transactions, Dave is planning to go public through — of course — a merger with a blank-check company. The deal that Dave (backed by a Mark, in this case Cuban) struck last month would put a value on the company of about $4 billion.
With some 1.4 million checking-like accounts, Dave is far from alone among the one-name banking outfits that would like to have your money. There are Marcus and Albert, too, and even Robin: Robinhood, the stock-trading app that went public this week, has its own debit card and banklike services.
Given the wretched experience it is to change banks, theirs is a tough sell to all but those who have never had a relationship with a traditional financial institution. But now, more than a year into a pandemic that kept most people who were still patronizing physical branches out of them for months on end, it’s worth considering whether steering clear may as well be a permanent habit.
So we talked to some Daves. And Davids. And one Davy.
They were all very nice, and that is part of the point. Start-ups lack much in the way of trust, but trust can’t be absent in a financial services company.
So the brand matters, and it begins with a name. “Dave is an affable guy,” said Dave Davies, senior reporter for the public radio station WHYY and a frequent fill-in host on “Fresh Air With Terry Gross.” “They’re easygoing, good guys, nonthreatening.”
In fact, the vibe that Dave the company is aiming for, according to its website, is more David, as in Goliath, as in you and me against the world, or at least against Wells Fargo. The founders — not a Dave among them, alas — never seriously considered other names, given how long they felt their own odds were, having never even worked for a financial technology company before.
“That didn’t occur to me,” said radio Dave, who always thought that the brand called Dave stood for a let-me-buy-you-a-beer sort of person.
But once you’re willing to be on a first-name basis with your bank, the actual app must arrive on your phone with minimal hassle and then blow you away. There is real promise here, given how many people find big-bank apps clunky. The start-ups’ interfaces are indeed generally slicker and simpler, very much a welcome change.
And if you resent all of the overdraft and other fees the big brother banks so often charge — and you do, there’s little doubt — Dave and friends look even better. They tack away from old-fashioned bankery, with a suite of offerings like advance access to your paycheck, overdraft fee avoidance and assistance building credit. Bigger banks are only starting to catch up.
While these firms have been able to attract plenty of users, one definition of success is whether those customers use them as their primary financial institution — for paying bills or direct deposit of a paycheck. Many of these firms’ customers use them for other things, like small loans or investments.
David Albertazzi, the research director for retail banking and payments at Aite-Novarica Group, a research and advisory company, believes that perhaps 3 to 5 percent of Americans are now using Dave, et al., as their primary institution. His colleague David Shipper said, “Getting that direct deposit seems to be the biggest challenge.”
Here’s one possible reason: For all the people who have ever been in a pickle and had a branch banker bail them out or found their way to an empowered customer service representative on the phone, the brave new world of ultra-lean start-ups invites some questions: How good will the help be on the other end of the in-app messaging service? Is it some outsourced neophyte? A robot?
Early on in his banking career, Dave Martin learned what a difference a Dave makes. He was the manager of a Progressive Bank and Trust branch inside a Winn-Dixie store in Thibodaux, La. No brass or dark wood — “basically a glorified Popsicle stand,” he said.
He had personality and customer-service hustle to spare, though. “I was running for mayor of Winn-Dixie every day,” he said.
Now, as the founder of his own consulting firm, he pitches the enduring value of the human touch that is hard to convey via text message or even video. “People do not visit branches,” he said. “They visit bankers.”
But even if digital natives are comfortable interacting face to screen, they aren’t necessarily financial sophisticates, for all the advice that’s online. “They don’t know jack about budgeting and credit scores,” Mr. Martin said.
Can these customers count on getting the help they need? (So far, none of the start-ups has called him for advice.)
The question is borne out by some pretty recent history.
Robinhood’s trading platform and messaging system melted down when the markets gyrated early this year. When it cut off certain trades altogether during the GameStop saga, users were furious about the lack of answers.
Dozens of lawsuits resulted, as well as a host of investigations, including the largest fine that the Financial Industry Regulatory Authority has ever imposed. During a congressional hearing in February, one lawmaker dialed Robinhood’s automated help line — and got a recorded message telling him to send an email. (The company has vowed to improve its customer service.)
Perhaps the most intriguing thing about the emergence of these start-ups is the wildly different ways that they first present themselves to the world. Some have taken their cues from digital bank start-ups of yore, like Ally, and embraced concepts in their branding, with names like Aspiration and, more provocatively, Revolut.
Then there are Dave and the boys, a trend that came into broad view years ago with Charles Schwab and the digital bank offering it eventually introduced in the wake of its low-cost brokerage services. It advised anyone who would listen to “Talk to Chuck.”
Goldman Sachs, with all of its riches, could have bought just about any URL. It chose Marcus, after Marcus Goldman (tough luck, Samuel Sachs), as the bank, the quintessential Wall Street firm, tried to put a friendly face on a new retail banking operation.
Another app, Albert, has a standard debit-card offering plus a service it calls “Albert Genius,” powered, the company says, by a team of human financial experts. (Dave Davies’s legal first name is Albert, by the way.)
Daves aren’t necessarily male. Davy Stevenson, the vice president of engineering at Hasura, which helps software developers more easily build applications using data, was an early neobank adopter herself. She experimented with the first versions of Simple, which no longer exists.
Today, she banks with her humble credit union. Though she pines a bit for the technical wizardry that her software developer brain knows the institution could deploy, she’s also happy with the way the people there treat her.
She also said she couldn’t help but notice all these guy names, especially when she contrasted them with voice assistants like Siri or Alexa: Men equal finance, strength, knowledge; women equal service. “It’s a mirror on our society and how we value things,” she said.
Some financial start-ups, like Bella, Ellevest and Lili, are indeed making a go of flipping the gender switch. Ms. Stevenson is not accusing any founders of sexism, and to her, at least, names alone are not a reason to shun any start-up (or to give the silent treatment to, say, Erica, Bank of America’s virtual digital assistant). Indeed, just over half of Dave’s roughly 10 million customers across all services are female, according to the company.
Still, branding matters, and this here Ron is rooting for these companies to keep dragging the industry out of the Dark Ages in every way. Perhaps the next one will find the workaround that allows me to transfer money from one institution’s account to another without being told that it could take five business days.
It could use a good name. One that evokes music and movement, grace and strength, even in the face of enormous pressure.
Call it Simone.
Davey Alba contributed reporting.
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