Meet Dave: an AI dressed up in a bearsuit that’s just launched to save you from the evils of expensive overdraft fees. Hand Dave access to your checking account and the app’s machine learning algorithms will get busy crunching your spending data so the bear can warn you about pending transactions — like a monthly subscription for Netflix or your typical Saturday night Uber bill — which might push you into the red and incur an expensive bank penalty.
The US-only app predicts a user’s “7 Day Low”, aka the lowest it thinks your bank balance will drop in the next seven days, in order to encourage and support better money management. The ultimate aim being to help people avoid having to fall back on their overdraft as “an expensive form of credit”, says co-founder Jason Wilk, describing it as a sort of “weather forecast” for money management.
Dave also includes a payday loan facility — so users who face the inevitability of having to dip into a negative balance can opt to borrow up to $250 ahead of their next paycheck to see them through. But unlike payday loan companies (such as Wonga), which also offer a short term borrowing facility to mobile users but typically charge very high rates of interest, Dave’s payday loans are 0% interest.
Wilk tells TechCrunch it will also merely be asking users to pay it back when they can. “We’re not even tying this to a timeframe. Unlike the payday loan. All we’re saying is to users pay us back whenever you have the estimated income come it,” he says.
If all this is sounding too good to be true there may be a reason for that: Dave hopes you’ll be so thankful of the service its machine learning algorithms are doing for your spending habits that you’ll give a donation when the bear asks for a tip — although this is also entirely voluntary. How much you choose to pay (if you pay) is also up to you.
To further incentivize the opt-in fee, Dave has partnered with Trees for the Future — and says that for every percentage users tip it will plant the equivalent number of trees via its charity partner (so a tip 2% will equal two trees planted).
An FAQ on its website says this of its partner cause:
Trees for the Future provides families in Sub-Saharan Africa with sustainable food sources, livestock feed, products to sell, fuel wood and up to a 500% increase in their annual income. Since 1989, Trees has planted over 115 million trees in dozens of countries and revitalized hundreds of thousands of acres of soil while changing people’s lives forever.
So, in essence, Dave is about rebranding the roundly hated bank overdraft fees, which apparently do nothing except enrich banking giants, and trying to replace them with feel good donations attached to a worthy cause. A line on its website claims: “Dave lives off of donations”, although Wilk says it does also charge a small subscription for its app — $0.99 per month. Albeit, this subscription appears radically reasonable beside the typical cost of overdraft fees.
The team behind Dave has raised seed funding from a string of high profile investors. Since being “officially” founded in September last year, they’ve pulled in $3M from investors including Mark Cuban, SV Angel, The Chernin Group, Jonathan Kraft, Skip Paul, Diplo and others. So, safe to say, this is not Wilk’s first startup; indeed, he says it’s his “fourth go around”. (One of his prior startups — a video syndication platform called AllScreen TV — exited to Zealot Networks for $20M, having raised just $330k in seed funding.)
The idea for Dave came about because Wilks says he and a couple of his co-founders were “chronic overdrafters” in college. “I would always be overdrafting my account. I had hundreds and hundreds of dollars overdraft use on my account. So this is a problem that I’ve always had and I knew it needed to be solved. And I’m also an active Redditer and I can see on a weekly basis that somebody is posting about being upset with bank fees.”
He also points to the rising cost of overdraft fees in the US, as another reason he wanted to do something here, noting they amounted to $36BN last year alone, and couching the problem as “upsetting”.
To figure out how they could help, the team set about doing market research to find out why people were overdrafting, and said their survey turned up two main reasons: people not being aware of upcoming…