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Since the onset of the coronavirus pandemic, banks have scrambled to adjust to the rising prevalence of financial hardship among their customers: Nearly two-thirds of US consumers now live paycheck-to-paycheck, according to a Highland Solutions study, up from 53% prior to the pandemic.
We talked with Dan Henry, CEO of Green Dot, about how its digital-only offshoot Go2bank, launched last month, is meeting the call for solutions catering to lower-income consumers—and why it’s critical to do so.
The following has been edited for brevity and clarity.
Insider Intelligence (II): How does Green Dot differentiate itself amid the increasingly competitive landscape of US challenger banks?
Dan Henry (DH): We differentiate ourselves first and foremost in that Green Dot is the only fintech that owns a bank charter. But our commitment to serving a low- to moderate-income consumer and creating products and solutions to meet their needs will differentiate Green Dot in the long run. Because of our vertical integration of our assets, we own the bank, reload network, and our own tech stack. We can serve the low- to moderate-income consumer very well, and we can do so profitably.
II: Go2bank’s offerings include early wage access and overdraft protection, among others—why is it important to offer those features?
DH:We are aware of the pains, struggles, and anxieties of low- to moderate-income consumers in this country. And while we can’t do anything about their level of income, we can add tools to minimize the anxiety and stress of dealing with their day-to-day finances. Getting paid faster, to me, is table stakes. The fact that we own Green Dot Bank makes it a lot easier for us to do that. During the last round of stimulus, nobody got their stimulus checks faster than Green Dot customers.
Overdraft fees are a huge revenue generator for FIs that created them—the best customers for an FI are the ones who overdraft four or five times a month. And they do so unknowingly and get hit with a $35 charge every time it happens. If a customer uses direct deposit on a recurring basis, Go2bank will give them the ability to overdraft up to $200. And if they cover that overdraft within 24 hours, there’s no fee charged. That’s key compared with other FIs: Through text message or email, we empower our customers with real-time information in terms of where they’re spending their funds and what the available balance on their card is.
II: To what degree did the pandemic inform Green Dot’s development of Go2bank and its features?
DH: The pandemic amplified the need for the products and the urgency of getting the product out there, and I believe it expanded our total available market. But the need has always been there.
The need for this solution is greater than it’s ever been. When you think about the total available market in the US, the number of consumers who fall into the income category below $75,000 annually is probably now approaching 100 million.
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Source:: Businessinsider – Finance
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