Fintech capital raise to fund launch into credit space

US-based fintech Douugh has announced the launch of a capital raise through leading market platform Equitise, designed to raise $5 million to help fund its launch in early 2019 and expansion to the Australian market later next year.

Douugh has said that it will initially roll out a smart bank account featuring a Mastercard debit card, which it secured after partnering with the firm.

According to Douugh, the account will provide a full suite of everyday mobile banking functionality, along with features focused on helping users pay off debt, spend less, save and build wealth.

With a clear initial focus on the global Millennial market, founder and CEO of Douugh Andy Taylor said the “sweet spot” of the Millennial demographic for early adoption of the Douugh offering is the HENRY (high earning, not rich yet) segment.

“HENRYs sit at the top 20 per cent of US households based on income, which starts at around US$100,000. With nearly 125 million American households in total, the affluent segment numbers just under 45 million households. In most any spending category, the affluent top 20 per cent account for about 40 per cent of total consumer spending,” he said.

“This segment is ready to plan for their future and start accumulating wealth. This is where Douugh can educate and automate their finances and alleviate the stress involved, helping them live financially healthy by still enjoying the now while planning for their future.”

Mr Taylor said that the “ultimate goal” of Douugh is to serve as a “platform business, offering a financial control centre where people’s finances are managed on autopilot”.

The CEO added that in the short-term, Douugh will expand its AI capabilities and venture into the wealth management and credit space, as it looks to “foster an ecosystem of partners” within its own marketplace in order to allow customers to “leverage their financial data and save money – across financial services, insurance, utilities and retail”.

However, Mr Taylor sought to emphasise that Douugh is a technology company, with no immediate plans to become a bank and take on the business model, risks and regulatory capital requirements needed to operate a bank.

The CEO said that Douugh is instead developing its own proprietary technology stack, leveraging the banking licence of existing banks to “scale up a customer base in key international markets”, operating as an “OTT (over-the-top) application”.

“Technology and the pioneering of a new, platform-based business model will be the key differentiators in winning customers off the major banks, and it will be the true fintech’s with global scale that will ultimately be best placed to capture the market share in the long run,” Mr Taylor said.

Commenting on the announcement of the capital raise, Equitise co-founder Chris Gilbert said: “As the fintech community continues to mature in Australia, it’s great to see Douugh roll out its ambitious international plans to scale and further develop a unique product offering.

“Equitise is pleased to be able to assist Douugh in its upcoming launch into the US market with capital secured from Equitise.”

[Related: Aspiring ‘neobank’ announces new partnership]