Dave Chief Marketing Officer Michael Goodbody on Building a Better Bank For All Humans
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Better Banking for Humans
Today on The Future of Fandom, we bank for humans. You’re a human, right? Well, then you’re going to love this.
In this episode, we explore how Dave is creating an ecosystem for, and inspired by, those facing economic hardship, through the lens of their CMO, Michael Goodbody.
Ever notice how most fin-techs or financial apps you see gain popularity, target investing and other actions frequented by high earners or high net worth individuals. Well, guess what? Most people aren’t in that position and the team at Dave noticed. It inspired Michael to join and build a community to serve a different set of needs. It also brings up interesting brand questions like, how do you create an enthusiastic community around financial topics, which people don’t love to talk about? How, even if you empower them to better their finances, do you retain that base?
Connect with Michael Goodbody on LinkedIn: https://www.linkedin.com/in/michaelgoodbody/
Read more about Ladder: https://dave.com/
Full episode here:
FULL TRANSCRIPT BELOW
Adam Conner (01:17):
Michael, how are you? Thank you for joining me.
Michael Goodbody (01:19):
I’m great, thank you. Thanks for having me.
Adam Conner (01:22):
I appreciate you taking the time to speak with me here. I’m super curious about a few things around how you build community in your corner of the fintech world, but before we get into the nitty gritty, I just want to know what about Dave specifically, compelled you to join their ranks? And also, we should probably tell the folks what the heck Dave is. But I would love to know more about both of those things.
Michael Goodbody (01:46):
Yeah, absolutely. For anyone that isn’t familiar specifically with Dave, we are an app first, financial service’s product, founded in 2017, 2018, so four, five years old. And we really started out in the financial service’s ecosystem by offering people a way to avoid overdraft fees by effectively closing that gap, in terms of short term credit. If somebody needs up to, in terms of the original time that we launched it, up to $75, in an emergency. And so from my personal perspective, Dave’s again, been around for three or four years, but really came on strong in the ecosystem a few years ago.
Michael Goodbody (02:39):
And I think anyone that was in fintech took a lot of… Final technology, for those don’t know that, the shorthand for fintech. But for anyone that was in the space a few years ago, Dave just came out of nowhere with a really interesting value prop, really interesting and different way of thinking about brand and thinking about relationship with the consumer from a financial service’s perspective.
Michael Goodbody (03:03):
And so, it’s always been really heavily on my mind, as somebody that’s been in this space for a while as a brand and as a company, that’s just pushing the edges of things. And so when the opportunity came up, for me, it was a no brainer because of the heritage they’d already built in that three or four years that they’d been around, but also their willingness to push the boundary and do something different. And so for me, it’s a combination of that, a combination of the fact that they have a really significant data advantage within the financial services space, and we can talk to that, but also just from a brand and marketing perspective, it’s just heavily differentiated and just a really interesting challenge to solve with the consumer, but also, they’re solving it in a really interesting way. So it was super interesting to me as a challenge and as an opportunity.
Adam Conner (03:52):
The opportunity is where I want to go here, because you’re specifically creating community and serving, well, humans, as it says right on the front page of Dave.com. But in the fintech landscape, and let’s call a spade a spade here, most of the services that we see, or at least that I see, are catered to young, high net worth, or HENRY, high earners not rich yet, types of folks, people who can spend money, invest. Not typically the community that is first thinking, “How am I going to pay for X, Y, Z when my paycheck doesn’t come in until Friday?” And so, that obviously is one thing that you do a little bit differently in terms of who you target, but I guess my first question is, why don’t more people focus on the type of people that Dave does? And maybe within that, you can help us elaborate on how you differentiate. But I noticed that right off the bat, and it’s good.
Michael Goodbody (04:53):
Yeah. I mean, I think that the assumption, and certainly when fintech first started come coming around, 4, 5, 6, 7 years ago, and it was really… I think the origination of fintech in its first instant was in coming out of the financial crisis, and it was more of a trust thing opportunity for technology companies to come in and play a role in financial services, than it was maybe about mass market opportunity. It was just there were a large set of consumers that had lost trust in existing financial services brands. And so there was this opportunity for new entrants to come in and win. But in that moment, I think everyone globally in the U.S… Obviously you can probably tell, I’m from the UK, so there’s a lot of that heritage in terms of how I think about things as well. But everyone came in and was like, “Okay, we’re going to solve problems for people at the higher end of the income spectrum, at the higher end of the credit spectrum.”
Michael Goodbody (05:55):
And because I think, the assumption there is that they are, I guess, a more profitable customer base if you’re trying to build a new business.
“What is really important to understand when you think about how fintech has taken off in the U.S, Is that there isn’t the same level of problems to solve for people who are, to your point, high income, high earning, high net worth. If you have a good income, if you have a high net worth, if you have good credit in America, you’re okay.”
— Michael Goodbody (05:55)
Michael Goodbody (06:32)
There’s plenty of great opportunities out there for you and most of the big, even what I consider to be main street banks, do a really pretty good job at servicing that user base. But it’s really, if you’re in that lower income, high paycheck to paycheck, lower credit cohort, which the majority of Americans are, that the financial system actually tends to give you a really poor product experience.
Michael Goodbody (06:59):
So, I remember when I first moved over from the UK seven or eight years ago, and I went and opened an account with a main street bank, and one of the things that really struck me was that it was fee free, provided I had more than $2,000 in my checking account at any given time. And if I didn’t, I had to pay a maintenance fee and I had to pay overdraft fees and all that sort of stuff. And it struck me as this, even then, it struck me as very strange that if I have less money, I pay more fees, but that’s the way that the system is built here. And so, when you look at fintech, most of the companies actually that I’ve seen come to scale in the last three or four years, have really done so by solving problems for the lower income paycheck to paycheck, lower credit score users, rather than for the high credit score users.
Michael Goodbody (07:50):
I think there were some early entrance into that space that did really well there, continue to build a brand there, but recently it’s been much more about how do you solve problems? How do you give a great product to people that are constantly being hit by fees and poor experiences? Because there’s a lot more friction in their experience, and so there’s a lot more opportunities to convince them to shift over, than there are with higher income banking experiences.
Adam Conner (08:17):
Yeah. I immediately think, growing up, obviously, even 10 years ago, there were weren’t apps out there in even the fintech world that could access any audience. But I think about this world of lower income where these financial hardships are a real problem, and I think about predatory payday loans, you go… There were physical locations and they were always built in low income areas and it just didn’t carry the, well, experience that you are hoping to grow and to have people thrive in. And I find it incredibly important that those exist, because it’s fair. It’s equity. It’s access to that experience. I feel very strongly that actually, by large numbers, been discriminatory against economic classes with regard to how our experiences and [inaudible 00:09:15] after made. And with that carries a lot of emotion, specifically for those who are subject to those circumstances.
Adam Conner (09:26):
And so I’m really curious, because we talk about fandom a lot here, financial hardship, all of these things, that these stereotypically carry a reluctance to share about that. People don’t. They feel ashamed. Poor credit, things like that. You don’t have the same access everybody else does. How do you build a passionate fan base around that though? I mean if Dave is the solution, part of that’s got to be word of mouth, and it could be within those small communities, but ideally, you want people to shout into the rafters. How do you build one when it’s a topic that people are reluctant to explore vocally?
Michael Goodbody (09:59):
Yeah. I mean, I think it’s not just reluctance. I think it’s also just… I mean, you’re layering on that reluctance, which comes from talking about our product, which shows that you are, from a financial service’s perspective, potentially not thriving, I guess would be the right way of putting it. But on top of that, who talks about their financial services partner anyway? Do you?
Adam Conner (10:26):
Right, exactly. Even the folks that are making a ton, unless they’re bragging and [crosstalk 00:10:31]. They’re not going to-
Michael Goodbody (10:31):
Who else have you talked to about how great your bank is? Your primary banking insurance. It’s just not something that we are naturally [inaudible 00:10:37] to talk about. I think take a step back. So 65% of Americans live paycheck to paycheck, and that’s self-defined, they define themselves as living paycheck to paycheck. And then of that, a very significant proportion of them say they are struggling to live paycheck to paycheck. So even 12% of people that earn a $100,000 or more, actually say that they’re struggling to live paycheck to paycheck. So, I think the important thing when you really try and drill into this is, a, there’s a lot of people in this situation.
Michael Goodbody (11:12):
We started off here talking about high income, high net worth. There’s a lot of people, even in that category that are struggling to maintain their own personal liquidity through a month, through a two week period, as they pay bills, pay rent, pay whatever’s expected of them.
Michael Goodbody (11:29):
So, first off, I think it’s important to understand that there’s a lot of people in this situation, where they actually have to figure out how they’re going to pay a bill this week, pay a bill next week, before their paycheck comes in. On the other side of it, I think the important thing to think about is that the existing systems that are set up are… And we talked about this at the beginning
‘If you don’t have enough money that the banks can effectively lend your money to make a return on that money, you’re going to be paying for your financial services or your banking experience in the form of fees. And the lower down the income spectrum you go, the more that becomes about fees and interest, because that’s the only way that the banks can get the money back that they incur from providing you services or lending you money.”
— Michael Goodbody (11:55)
Michael Goodbody (12:21):
And so, the downside of that is that, to your point, the lower income you are, the worse your experience is. And so the people that pay the most fees are the ones for whom it is the biggest burden. And it’s a natural tension and it’s a natural imperfection of the system that exists right now. So for us, as we think about, to your point around fandom, one of the first things that I did when I got up today, we did a big brand study to try and understand, what is it about this brand, has led to the growth that we’ve had? And we’ve had phenomenal growth. We’ve given out more than 50 million advances, about 3.7 billion of origination. We’ve got six million total members.
Michael Goodbody (13:03):
And when you look at just downloads of the Dave app, since 2018, since we really scaled up, you’ve had more downloads on iOS and Google than you have of American Express, of Discover, of a lot of these other credit products. So they’ve done something amazing at Dave, and I really wanted to dig in to try and understand what it was. And what we found was that, against all of these other brands that we think about, top 10 banks, all the other digital banks, all the other fin-techs, Dave actually had a higher quality score amongst people familiar with the brand than anyone else. And it really blew me away, because I didn’t expect to see that coming back. And when you dig into it, the root of it is a couple things, right?
Michael Goodbody (13:44):
When somebody is going through a tough time and pretty much, you turn to Dave when you are going through a tough time. The way that we bring people into our ecosystem is through this idea of like, “Hey, we’ll lend you up to $250. You can get it the same day. We’re not going to… It’s free if you don’t want to…” We actually work on a tip basis, so about half of our users tip us and that’s where a large portion of our revenue comes from. And so in that situation, we are helping people out at a time when they’re struggling with something. And so we found that both that ability to solve a short term problem that’s pretty significant for somebody, that leads to a lot of, to your point, fandom.
Michael Goodbody (14:27):
I think the other side of it is the how we do it and how we represent ourselves.
“So if anyone’s listening to this and wants to go and look, Dave.com, you’ll see, from a brand perspective, we are very different to what you would expect from a financial services brand. Our tagline is “Banking for humans”, but ironically, our persona is this bear, this cuddly teddy bear type creature, that’s all across our app, it’s the icon for our app and is in all of our media services.“
— Michael Goodbody (14:35)
Michael Goodbody (14:51)
And what we find when we talk to consumers is the idea of being confronted with a tough financial moment and then having to deal with or steer a financial brand that can come across as judgey, it doubles down on that pain and that discomfort.
Michael Goodbody (15:22):
So what we do is, we completely shift that experience to people, and we’re literally a cuddly brand. We’re a happy, friendly face that people can turn to when they need that help. And it’s just a really interesting difference in how you build that relationship. You take away the intimidation factor of financial services and you just make it into a partnership, into being someone’s friend, and being approachable, even to the point that we’ve personified the brand as a name. Our name is Dave, and again, it comes across, Dave is like, Dave’s your friend, Dave’s a brother, an uncle, whatever it is. But we’re personifying, we’re making it less intimidating. And that just works really, really well in terms of building that relationship with our core user because they’re going through something difficult.
Adam Conner (16:15):
Yeah. I couldn’t help, but notice, and I assumed actually, that Dave was the name of the turtlenecked bear.
Michael Goodbody (16:22):
Adam Conner (16:23):
Okay. So there we go. But yeah, it’s an interesting way to put it. A cuddly presence, or a friendly presence, which certainly is, well, I would not describe that. That would not be an adjective to describe what I’ve seen in other solutions, gosh, even over the last 20, 30 years, for this financial class.
Michael Goodbody (16:42):
And there’s a reason for that, which is that most financial services brands make money, most financial services companies make money by convincing you that you haven’t got this, you can’t do this yourself. So even the investment firms, there’ll be some guy in a suit standing next to you being like, “Hey, we’ll help you out” but it’s all about convincing you that you can’t do this yourself and you need to pay them to do it.
Adam Conner (17:10):
Right. Exactly. And that’s just not the case, is it? I mean, it’s not. Everybody has the power to do it and they should, and so I’m glad that there are services like Dave that are there to do it. Now, let me ask you this, because this is an interesting tidbit of it for me. Obviously, you are helping these financial classes, these communities, grow themselves financially. You want to empower them to elevated positions of maybe not needing that, I don’t know, the advance on the payday. They might graduate from that specific offering. I’m curious how to maintain a fan base though. And we can assume, as a baseline, that no finance community is really shouting to the rafters, except maybe somebody invested in a meme stock, about what they do. But at the same time, if somebody engages with Dave in the best way possible, given that specific service, they get beyond the point to which they need Dave. Now, I’m guessing you guys thought about that, but I’m curious as to how you’re maintaining the fan base going forward.
Michael Goodbody (18:20):
Yeah. And I think that’s the important way to think about our business model as much as anything else, which is that, Dave is a neo bank so, or just a bank, I guess, if you don’t want to use the technology term or-
Adam Conner (18:36):
Yeah, the futuristic prefixes.
Michael Goodbody (18:38):
Yeah. So that’s what we are.
“We have a debit card, we offer cashback rewards on the card. There’s a host of other products that we attach right now, and that we will attach in the future to that banking experience. But the way to think about it is that yeah, what we are doing is bringing users into our financial service’s ecosystem, which just a traditional. We offer debit products, you can put your paycheck in Dave, you can pay your bills on Dave, you can go spend the money on our Dave spend account. But we acquire people by solving their biggest point of need, and then we push them through that ecosystem.“
— Michael Goodbody (18:40)
Michael Goodbody (19:28):
We acquire them, you build a relationship with them by helping them in that initial time of discomfort, if you were, or creating an opportunity for them. And then from there, our job is to retain them in the Dave financial ecosystem. And so, that becomes about, okay, so first off, you take the advance, second off, we try and encourage you to put it on your Dave spender card and then we want you to spend that money and enjoy spending that money. So our big challenge is really, how do you delight users as they’re going through that process, and give them something heavily differentiated from what they’re doing right now. And again, it comes back to things like what we offer is cashback rewards on purchase that are made on the Dave card.
Michael Goodbody (20:11):
Now for most of the people that are probably listening to this, for you and me, cashback rewards don’t sound particularly differentiated. But again, if you are a lower income, lower credit user, you don’t have access to the same sort of… or often you don’t have access to the same financial products that higher income, higher credit score users will have. And so, even just giving somebody a free debit card, no maintenance fees, no overdraft fees, the ability to get cash back, all of these things are heavily differentiated in that situation for this user. And our fandom experiences is, bring somebody in through that tip of the spear value prop, which is you’re solving that biggest point of need for them, and then retain them and offer them the sort of banking experience that you get if you’re earning a $100,000 a year and have your paycheck going into a chase account or into a Bank of America account.
Michael Goodbody (21:14):
Offer them that sort of experience, for free. And that’s effectively how we’re winning them over, by giving them premium banking, which for a lot of people, just isn’t accessible, unless you have a certain amount of money, unless you meet the threshold of income that’s required, going into a certain account.
Adam Conner (21:32):
Right. And hey, free is the best price out there, right?
Michael Goodbody (21:34):
Michael Goodbody (21:34):
Free plus. So it’s free plus benefits. Free plus. And we are constantly looking at, how do we solve the problems that exist within the ecosystem, and gradually build that relationship with you and solve your point of need. So we start off up with that short term credit. How do we close that gap? If you need 250 bucks, up to 250 bucks in a situation. And then the next part of it is, we offer you the spend account, cash back rewards. We also have a side hustle feature where you can go and look for Uber or DoorDash or jobs like that, that are available in your area. So you can go from, “Okay, how do I close this liquidity gap that exists for me?” to, “How do I actually make sure that doesn’t happen again by helping to build up my emergency fund? Helping to build up what I’ve got.”
Michael Goodbody (22:19):
So again, it’s like, how do we solve all of these problems for people, build that relationship with them and then graduate them through the financial ecosystem?
Adam Conner (22:26):
Now that’s interesting, having a whole side of the offering, which allows people to quickly and easily, if they need to, find those stop gap things, which are often all that folks need. You just need a little bit, right? That’s the whole point.
Michael Goodbody (22:43):
Adam Conner (22:43):
And to be able to provide that quickly and in the same space. Yeah. That’s definitely a value add. It makes me wonder actually two things, a, why more… Or maybe people do that, I just don’t see it, or maybe they don’t. Hopefully for you guys, they don’t, and you guys are first. But then secondly, more broadly speaking and to that other F word, the future that we talk about here, I’m curious what you think, and let’s just take these app based services, or maybe the world of fintech. Looking a couple years down the line, obviously you’ve been with Dave now for a couple years and the offering has grown. What do you see for a best in class community building portfolio of things, that an app might do to build its community? What other elements of their economic life do you think would be included in that? If you could get everything you wanted, because somebody in the future will, what would it be?
Michael Goodbody (23:37):
Well, I think that what we are… We’re growing with our users. So again, we’re three or four years old, and by our estimate, there’s about 160, 170 million people in America that are either in what we call the financially vulnerable or the financially coping space. And that means anyone in that group is going to be over drafting several times a year, maybe up to 20, 30 times a year, depending on where they fit within that spectrum. And they’re building credit and looking for access to short and long term credit to get them through their financial needs. And so, for us, again, we solve that biggest pain point for the biggest set of users. We do it in a friendly and approachable way, memorable way.
Michael Goodbody (24:29):
And then what we try and do from there, is grow with them. So we’re trying to solve the problems that that user has as they grow. The majority of our users are in that gen Z, millennial group. They’re young, they’re under 30, and so they are almost growing their relationship with Dave as they hit the needs that they have within their financial services journey, for the first time. So, we close that gap, in terms of short term credit. Once you have come Dave, we help you pay the bills, keep the lights on, get groceries, maybe make a car payment, maybe go up market from that.
Michael Goodbody (25:10):
Maybe it’s about paying for a trip, something like that, that we’re trying to help you do. So what we do is we close that liquidity gap for you. And then from there, we help you make progress. And I think that’s the right way of thinking about it, is that generally, people fall into these different categories. They start out with, “I’m living paycheck to paycheck and I’m not coping with it. I’m not actually being able to take my income and spread it across all of my outgoings.” So we solve that problem first. Once that problem has been at least solved or temporarily alleviated, then it’s about, “Okay, how do I keep my head above water?” And so that’s about building a cushion. That’s about, once you’ve stopped having to worry about, “Do I have enough money to pay the bills?” Then it’s about, “Okay, how do I start building a cushion and how do I start making progress?”
Michael Goodbody (25:58):
So for us, that’s about things like side hustle, where we are really showing people the opportunities that are out there to earn a little bit more money, if you need to start building that cushion, as well as things like building your credit. So we have credit building options on the site, because we know that’s going to be a big part of this moving forward, is that people maybe want to start building an emergency fund.
“Everyone basically has the same, or has a similar set of needs, where it goes from stopping the bleeding to then making progress, and do you want to buy a car, get a house? That’s the journey that everyone wants to go on. And so for us, it’s about following that journey.”
— Michael Goodbody (26:11)
Michael Goodbody (26:38):
So right now, we’re in that vulnerable coping space where we’re solving the short term problem, then we are moving up and we’re starting to help people get ahead. Start getting into the point where they’re making progress, and then from there it’s going to be about, how do we help them once they’ve got past, they’ve built the emergency fund, then they’ve saved for a down payment on something that they want to get. And so then it becomes about that piece. It’s about how do you get somebody access to the credit they need, to make progress even further or change their lifestyle? And then from there, after that, it’s obviously about investing, it’s about building out those pieces.
Michael Goodbody (27:13):
But for us, for our user base, primarily right now, we’re focusing on solving the short term problem of how do I have enough liquidity, and then moving on to that next step, which is how do I just build that cushion, that emergency fund, and how do I make sure that if I want to borrow money, that I can help improve my credit to make that available to me and affordable to me?
Michael Goodbody (27:33):
But we certainly see in the future, buy a home with Dave, something like that, being something that we could do as we grow with these users.
Adam Conner (27:40):
Wouldn’t that be a cool one stop shop? Well, for explaining and speculating on the long term, in the short term, right here with me on the mic, Michael, thank you so much for joining us.
Michael Goodbody (27:52):
Adam Conner (27:56):
It’s worth noting that Dave’s got a hold of something pretty amazing, most recently marked by a 100 million investment at the hands of FTX. Thanks again to Michael Goodbody for joining us. And thanks to you, the listener, for exploring the Future of Fandom with us. I’d encourage you to stay connected. So subscribe to the Future of Fandom, wherever you’re listening to your podcast, and you can also find all of our content at livelike.com/podcast and on socials like LinkedIn @livelike and Twitter @livelikeinc. I look forward to predicting the future again with you real soon. And until then, I’m Adam Conner saying so long, and thanks for being a fan.
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