GoBank … that’s that mobile bank account from Green Dot, right? The unprofitable offspring of the industry-leading prepaid card?
Turns out it’s much more than that. The technology running GoBank, partially inherited from the Sam Altman-led startup Loopt, acquired by Green Dot in 2012, now underlies the entire Green Dot product set. GoBank, far from being an ancillary product costing the company money to keep afloat, is actually the engine behind all of the company’s offerings. Here’s CEO Steve Streit from yesterday’s earnings call:
So we’ve been working on the processor, the GoBank Product Technology Platform. By the way, let me talk about that, because nobody asked about it, but it’s kind of important. The word GoBank is a product. In other words, you sell a product under the GoBank brand name. But it’s also the underpinning guts, if you will, the technology platform that allows you to deposit a check or to do person-to-person payments or host an embedded savings account and sweep money back and forth. All of that, right?
Now, all of our prepaid products sit on that same GoBank platform. If you were to buy a Walmart MoneyCard and download the mobile app, you would be shocked to see the similarities of GoBank, but that’s allowed us to shutter, if you will, over time to shutter our old code that’s 10 years plus old and retire those legacy processes, so we are saving a lot of money as opposed to spending money in investments.
Streit also described Green Dot’s two upcoming credit offerings: a secured credit card and Green Dot Money, a marketplace for unsecured loans. Both items are ways to gain more revenue out of Green Dot’s massive customer base — somewhere north of 100 million accounts — while also helping them develop their creditworthiness. Green Dot also signed a distribution deal with OneMain Financial, a personal lender, last quarter, Streit announced. “OneMain customers will soon be given the option to place their loan proceeds on a co-branded prepaid card in lieu of getting the loan on a check or traditional bank deposit,” Streit said.
Green Dot owns a bank — purchased in 2011 — which facilitates the banking-related services within all its offerings.
By being our own bank, we get to set our own risk policies and product roadmaps in accordance with regulation, of course, and good common sense. All the stuff we’ve done and plan to be doing with GoBank and all the new features on our prepaid cards and our ability to issue a secured credit card or the ability to legally operate Green Dot Money nationwide without spending hundreds of thousands of dollars on obtaining additional licenses is all an advantage of owning a bank.
Lastly, the bank saves Green Dot a lot of money every year. In 2015, Green Dot Bank contributed $21 million in pre-tax profit contribution to Green Dot Corporation through cost savings and interest income. This is money that our competitors pay to another bank that we get to pay to ourselves.
Green Dot has had a difficult few years, shutting down its lucrative MoneyPak product due to fraud problems, but has made up revenue with recent acquisitions, such as the tax preparation service TPG. Streit indicated Green Dot would be relaunching a version 2.0 of MoneyPak, with mobile and web-based risk controls, in the first half of 2016, and expected to win back many of the old product’s legitimate customers.Like This Post