Green Dot’s ‘Finest Year’ Built on Digital Products

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EXCLUSIVE – Green Dot had its “finest year in [its] history” in 2017, CEO Steve Streit said on yesterday’s 4Q earnings call.

The Pasadena, Calif.-based company, which operates a growing suite of digital financial products, returned to its roots this year in several ways. It demonstrated dominance in the prepaid category, which it created, and 55% of its customers are now millennials, which CFO Mark Shifke said bodes well because of millennials’ comfort with digital products.

Streit founded Green Dot in 1999 to help young people without payment cards make online purchases. It spent a decade creating variosu prepaid and card-based products for formerly cash-dependent customers, and took a dramatic step forward in purchasing a one-branch bank in 2011, giving it a license, on top of which it built an extensive digital platform. Its increasingly millennial customer bases represents a return of sorts to this original vision, but the company now operates a banking-as-a-service platform that underlies payments systems such as Uber’s realtime GoBank accounts and Apple Pay Cash, Apple’s P2P play.

Green Dot active accounts grew 4.5% on the year. “It’s an exciting time at Green Dot as the strong momentum in our established business lines as we just detailed are occurring at the same time as many of our new product lines that were launched as new initiatives just within the last year or so, are creating new growth sectors,” Streit said. He did not give numbers, but expressed satisfaction at the Apple Pay Cash program’s “rapid growth.”

A major goal on the year was “to make modest investments in new high potential initiatives,” Streit said. “We really overachieved with this step with several large-scale wins. First, our investments in BaaS or Banking as a Service platform, began to pay meaningful dividends by helping us secure partnerships with leading technology companies like Intuit and Apple.”

Other initiatives on he year included the purchase of rival Rush Card, building a corporate disbursements platform called SimpyPaid, which is related to its Uber program wherein drivers can “cash out for fares earned” in realtime, and launching a Visa secured credit card.

Shifke elaborated on what he sees as Green Dot’s advantages: “Our ability to invest our growing customer balances and generate interest income is a truly unique and compelling advantage of Green Dot being not just a FinTech leader, but a FinTech leader that is also a regulated bank that can earn revenue in ways that the other peer technology companies cannot.”

He also expressed on a macro level why 2017 is the start of a good phase for the company:

If you think back to Green Dot on even six, seven years ago the concept of getting a bank account or checking account at a grocery store or at a Walmart or something like that, would have been felt very alternative and edgy and nitchy and something that people would have said, oh, that’s not for me. But when you look at consumers today and millennials today in 2018, that simply doesn’t come up in that amount. You still get it from older folks but not from people in the 30s and 40s because everything in their world is on a mobile app or on a website, and so the likelihood to view of our product offerings as mainstream and cutting-edge and modern as opposed to weird or alternative has been a real positive macro for us.

GoBank, the mobile bank built after Green Dot obtained its license and incorporated the technology and talent of the startup Loopt, was not mentioned on the call.

To learn more about mobile banking and payments, join us at Bank Innovation 2018 on March 5-6 in San Francisco. Register here.

 

 

 

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