For the first time since going public in 2022, digital bank Dave posted a profitable quarter. 

Dave reported fourth-quarter adjusted EBIDTA of $10 million compared to a loss of $13 million in Q4 2022, according to the bank’s earnings release today.  

The $391 million company’s growth is due to continued investment in advanced technology like AI, Chief Executive Jason Wilk told Bank Automation News.

“The ongoing investments we’ve made in our proprietary AI-enabled risk management engine, which we refer to as CashAI, continues to bear fruit,” Wilk said during today’s earnings call. “We have seen record lows and 28-day delinquency rates and overall off performance in both the third and fourth quarters.” 

Dave launched CashAI in 2017. It has been growing steadily and has acted as a differentiator for Dave’s services in the market, Wilk told BAN.  

The bank reported it dispersed $1.03 billion in cash advances in 2023, up 29% year over year. 

The company’s delinquency rate for its cash advance solution was 2.19% in the fourth quarter, down 139 basis points (bps) year over year due to its AI underwriting model, Wilk said in the call. 

“We knew that we needed to get to 2.1 million monthly transaction members to get the platform profitable, and we have achieved that,” Wilk said. The company reported an 11% increase YoY compared with 1.9 million monthly transacting members in Q4 2022, according to its earning statements. 

WHY IT MATTERS: The Los Angeles-based neobank aims to continue investing in AI to drive efficiencies and to innovate more products, Wilk said.  

In December, Dave launched Dave GPT — its generative AI-driven chatbot that has features like setting up direct deposit, showing transaction history and offering consumer spending insight — and it is fielding nearly 90% of all customer inquiries, Wilk told BAN. 

Since launching, DaveGPT has helped reduce variable costs by 13% and has cut down on manual labor needed to resolve consumer inquiries, he said.  

AI has been implemented in operations ranging from marketing, fraud detection and know-your-customer processes to increase efficiency, Wilk said. 

THE BIG PICTURE: Like Dave, major FIs like Bank of America, Citi and Wells Fargo — along with fintechs like bunq, Brex and Klarna — are using AI to improve customer experience and reduce costs. 

• Digital bank bunq launched its gen AI chatbot, Finn, in December 2023 and expects it to automate 90% of bunq’s operations in 2024. 
• Buy now, pay later company Klarna reported that its Klarna AI assistant, powered by OpenAI, is doing the job of 700 full-time agents and could yield up to $40 million in profit improvement for the company in 2024, according to the company’s Feb. 27 release. 
• Bank of America’s Erica, which became a gen AI-driven chatbot last year, reported 18.5 million active monthly users, up 12% YoY, according to the bank’s Q4 earnings report. 

BY THE NUMBERS: In Q4, Dave reported; 

• 10.4 million customers, up 25% YoY; 
• Average Dave debit card spend of $369, up 41% YoY; and 
• Average cash advance size of $153, up 7% YoY. 

LOOKING AHEAD: The digital bank aims to start more direct deposits on the platform to deepen its relationship with customers.  

Dave aims to use its AI underwriting model for additional credit lending products that will be launched in 2025, Wilk told BAN. 

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