Dave vs. Goliath: The Banking App Challenging Big Banks

With the holiday season commencing, many of us will be spending more in an economy with rising inflation. With this additional strain on finances, unforecasted overdraft fees add extra pressure on consumers as they try to recover from pandemic losses. However, a banking app simply named Dave has built a platform that focuses on helping people tackle their overdraft fees, and at its heart helps finance become more approachable and more tailored to the average consumer.

Jason Wilk, founder and CEO of Dave and listee on this year’s Worthy 100, started Dave because of his own bad experiences with overdraft fees as a first-time consumer in college. “I thought it was an incredibly poor experience with my bank,” he says. “I was always having to go to the bank and argue with them to refund these fees, and most times they would not. I was also having trouble with financial management. A lot of these fees tied to my recurring expenses on my debit card, like a Netflix (subscription fee) or waterpower bill that you just totally forget about. And so, I thought we could build a better checking account that incorporated your upcoming bills and give you a way to get free overdraft. And so, the innovation that Dave brought to market was just using technology to approve people for free overdraft and not charging crazy fees.”

Seeing these issues, Wilk built Dave with people like himself in mind. Dave is a banking app that offers a free checking account with no minimum balance fees and no overdraft fees. You can get your entire paycheck two days early, and Dave will also offer $250 of free overdraft protection whenever their customers need it. One of the platform’s tools, Insights, will remind their clients about all the upcoming bills that may have been forgotten. As well, Dave helps customers build credit. When paying a cell phone bill on time using a Dave checking account, those payments are then relayed to the credit bureaus. By just paying everyday bills on time, Dave’s customers can improve their credit score.

Dave addresses consumers’ growing need for a more accessible banking platform. “We named the company Dave to be very different from the typical checking accounts that are out there,” Wilk says. “And most importantly we wanted it to be very approachable. An everyday type of a name like Dave feels like the everyday friend that’s got your back, the person who’s really helping you out. Additionally, it also doubles for Dave versus Goliath, given we’re a small company and a few people going up against these huge major incumbent banks like Chase and Wells Fargo.”

“We want to create financial opportunities for everybody who is paycheck-to-paycheck,” Wilk says. “That’s really what we’re trying to aim for. Those are the products we’re focused on building, and we want to see everyone have access to the same opportunity. Our mission that we’ve been working on is to build products that level the financial playing field. And so we want everyone, no matter what your income, to have access to the same types of opportunities in this country financially.”

Those who are financially vulnerable are most affected by overdraft fees, Wilk states. “If you look at those who are financially vulnerable, which are those that do not have $400 set aside for an emergency, about 50 percent of those people are overdrafting 10-plus times a year,” he says. “And there’s about 10 percent of consumers that are overdrafting 10-plus times a month. The customers who are being affected the most are people of diversity, and specifically, we relate that to the fact that most areas of lower income are not represented by major institutions. That’s where you see a lot of places that will have banks that charge heavy overdraft fees in those areas. You have banks that are payday lenders and pawn shops on corners. It’s really just a lack of good options for people that are in diverse neighborhoods.”

Big banks are too focused on profits and not their customers, Wilk explains. “We have the major banks and publicly traded companies that are continuously chasing profits and growth. But at the same time, they also have huge cost structures,” he says. “Companies like Bank of America have 50,000 web developers, and J.P. Morgan has 300,000 employees in this country. They have tens of thousands of bank branches around the country; all that leads to incredibly high costs. Effectively, all that means is higher prices for consumers. The ones that end up paying most of the fees are the ones that actually can’t afford it the most because the higher income clients are able to drive revenue for the big banks with things like major mortgages, investing, wealth and advice. The bottom end of this country ends up bearing the brunt of paying all these ancillary checking fees to make sense of that business.” 

At Dave, they are confident that there’s a huge opportunity and advantage by using data and technology to offer better products and service than the big banks at a fraction of the cost. “We’ve been able to get to over 11 million customers with just 200 employees, compared to 275,000,” Wilk says. “So that payroll cost alone allows us to offer our products [at] much better, much better rates.”

When asked how Dave is differentiating itself from big-name banks, Wilk states that staying approachable is crucial. “I think banks are much more transactional. They’ve lost that personal touch, which is one of reasons why we call Dave a bank for humans. We want to bring back that human element to banking that seems to have gone away. We don’t have the same fees as big banks. We operate as a software business and use data and technology to offer the same great price that banks offer but at a tenth of the cost or even cheaper than that. That’s a really awesome opportunity for anyone who’s tired of paying bank fees.” 

Wilk also stresses that education for consumers is important. “There’s a lot of room for improvement in education for customers, even when you can offer a lot of products, helping customers understand how much they can safely budget, how much they can spend and save, what they should or should not be investing in is important. I think that education is going to be a huge piece of whoever’s going to be one of the big winners in the space.”