Challenger bank Dave launched its generative AI-driven chatbot last week and is exploring multiple uses of the technology.  

“DaveGPT is the next generation of our chatbot with a generative AI component that sits on top of our knowledge base, has access to our prior customer interactions and a bunch of customer-specific data,” Chief Financial Officer Kyle Beilman told Bank Automation News.

Dave will use the bot to: 

• Answer support questions; 
• Service customers through the Dave mobile app; 
• Set up direct deposits; 
• Show transaction history; and 
• Offer consumer spending insights.  

Aisera, an AI-driven chatbot company, built DaveGPT for the bank. The solution has been in beta testing for more than six months and is expected to resolve between 70% and 75% of customer inquiries, up from the 50% of customer inquiries the bank’s previous chatbot could answer, Beilman said.  

The bot, designed to put customer account history at the fingertips of clients, provides a two-pronged benefit to Dave, he said: It offers self-service capabilities to customers while giving customer support teams more bandwidth to tackle complex inquiries.  

Deploying gen AI 

Generative AI is expected to be revolutionary for the Los Angeles-based bank’s operations; it is looking into other uses for the technology to help scale operations to serve its 9.9 million customers without necessitating additional hires, Beilman said.  

At Dave, nearly 15% of its 300 employees are working on AI-related initiatives, and the team has grown sizably in the past 12 to 18 months, Beilman said. 

“I think [gen AI] just improves the business model for people like us [and] can ultimately create a competitive advantage for us,” Beilman said. “It will allow us to pass along a lot of those efficiencies in the form of better pricing to consumers.” 

AI at Dave 

Dave has been using AI and machine learning since 2017 for underwriting purposes, Beilman said. 

ExtraCash, a solution that offers no-interest overdraft protection of up to $500 to smooth over the liquidity crunch clients might experience between paychecks, uses AI underwriting to decide how much overdraft it can provide a customer, Beilman said.  

“We started out our limits with up to $75, [and now] we’ve increased them way up to $500,” Beilman said. “That’s really on the back of the technology that we’ve built with machine learning and AI as the underwriting engine to make risk decisions for our customers.” 

The AI used for underwriting has been working well for the company, Beilman said. Originations are up while delinquencies are down, according to the company’s Q3 earnings report. 

In Q3, the bank originated $932 million of ExtraCash advances, up by 23% year over year, according to the company’s earnings statement. During the quarter, the delinquency rate for ExtraCash improved to 2.4%, down 1.65% YoY, according to the bank’s earnings statement. 

The financials  

Dave has raised $536 million in venture funding since its inception in 2016 with investors such as Mark Cuban backing the company, according to Crunchbase. The company went public in January 2022 via a SPAC deal and has seen its shares plummet by more than 95% since its IPO, as liquidity from the market recedes on the heels of rising rates. 

Other digital banks that went public through a SPAC merger have suffered a similar fate. SoFi went public in June 2021 via SPAC merger and has seen its stock nosedive by 22%; global payments company Payoneer saw its shares drop by nearly 40% since its IPO in June 2021. 

Dave believes it can turn the ship around through high customer acquisition through better customer services and new products in the pipeline for 2024, Beilman said.  

“We talked about on our last earnings call that we expect to deliver on profitability in the fourth quarter,” Beilman said. In Q3, Dave reported revenue of $67.3 million, up 15%, according to its earnings statement. 

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