Special Report: The deal marks a key step in Douugh’s efforts to expand its addressable market in the fast-growing US neobank sector.

Banking super app Douugh (ASX:DOU) has scored a major distribution boost in its core US market, in a deal with leading data connectivity platform Pinwheel.

The agreement will give Douugh direct access to Pinwheel’s dominant market footprint in the US, where it operates as an API provider for income and payroll services across more than 1,550 platforms.

Through Pinwheel, Douugh will be able to facilitate simple and automated direct-deposit switching for all of its US customers.

That marks a critical value-add for the business, which is focused on cost-effective customer acquisition for its market-leading financial wellness app — a centralised hub for customers to budget, save and invest.

 

The Pinwheel effect

In announcing the Pinwheel partnership, Douugh noted that one of the platforms other customers – a Top 10 Neobank in the US market – booked a 20% increase in direct-deposit penetration after rolling out its automated API.

More broadly, a recent survey highlighted that direct-deposit functionality was viewed by consumers as the second-most requested mobile banking feature, with 44% of respondents describing it as ‘highly valuable’.

In that context, the deal is a game-changer for Douugh’s customers, who are currently limited to manual switching for direct-deposits – a laborious process that has “a lot of friction”, Douugh said.

Now, it will be positioned at the forefront of the global shift to digital banking, where also half of all consumers globally are expected to have a neobank account in the next two years.

For Douugh CEO Andy Taylor, a lot of the company’s efforts to-date “have been focused on making it easier for people to switch their primary banking relationship to Douugh, in order to unlock the platform revenue opportunities”.

“We are thrilled about partnering with Pinwheel to make it effortless for US customers to switch their direct-deposit payroll to the Douugh app.”

The company said that on average, neobanks see a direct deposit of around $1,000 per customer each pay cycle. So even just 1,000 customer switches will result in an increase of $26m through the Douugh platform.

Along with providing a frictionless solution, Pinwheel’s API functionality also sets up a secure and consumer-permissioned point of connectivity, which also creates synergies for other financial wellness products in the Douugh ecosystem.

In that context, Douugh considers the agreement as material, although the specifics of the financial impact aren’t yet determinable.

“By leveraging consumer and employment data, Douugh can look to expand into lending or offer earned-wage access,” the company said.

The agreement is effective immediately, and is expected to go live early in the September quarter.

It marks an important strategic development for the business, which is focused on on its ultimate goal of providing a tech-focused platform that helps users to effectively manage their money and lead financially healthier lives.

This article was developed in collaboration with Douugh, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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