Green Dot introduced GoBank, its new mobile checking account, at a presentation in San Francisco today. GoBank is such a change from the traditional Green Dot prepaid card that it is hard to know where to start in talking about it. Even Green Dot seems ready for some surprises - they are rolling out the card on a limited release for now, and they may make updates to the card's features as often as every two weeks. But count me impressed because it is very affordable, it does a lot, and it gives people plenty of opportunities to tailor how they do their banking.
You may have noticed that banks are about as hesitant to change as can be. One survey said that consumers see banks as
more innovative than only two other industries - airlines and pet food producers. But let's give those two industries a break, because they face hurdles to building products around the biggest driver of innovation in the world right now is the smart phone . It is pretty much against the law to use your smart phone on the plane. Pets - even cats - have been notoriously late in smart phone adoption.
Green Dot says that the card will not cannibalize its existing prepaid card customer base. That may turn out to be true, because it is absolutely certain that the viral nature of the product will lead to sign ups from people that have never heard of a prepaid card. At the same time, Sam Altman's insight about a key demographic - "people under 40, have a smart phone, and are dissatisfied with banking" could certainly pull from some of the prepaid segment.
Here is what is unique about GoBank:
Photo card: It can be built around the user from the moment that the account is opened. So while its hardly unusual that someone could put their picture onto their card, it is new that they could pull that photo from their facebook photo albums. One ancillary benefit is added security at point-of-sale.
Better budgeting: Its also relatively novel that a budget tool could be truly personalized. Whereas most budgeting apps warn people to buy fewer lattes or to put away some money for Christmas, the Fortune Teller feature develops a time line of likely future expenditures and deposits. Thus, while it might seem tight to buy a latte late on Thursday afternoon when you only have $19 in your account, its less so if you know that there are no scheduled payments coming out of your account prior to the paycheck that you expect to get on Friday.
Taps into Stuff that you already have:
Some cards will let you text message a payment to people that have accounts from the same program manager. With GoBank, you can make a payment to just about anyone with a smart phone, a facebook account, or an email address. True, the person on the other hand does have to be willing to do some work to set up the ability to accept those funds, but it could be as minimal as having their own paypal account.
The Right Functions
Paper checks: if you want to pay someone with a check, GoBank will create and mail that check for free.
No credit. Not for now, says Streit, and not in the future. Streit did throw in one caveat to this statement and that is interesting because there has never been any qualification in this viewpoint until now, but he said that there was always that possibility that they would consider partnering with another bank for a credit product.
Easy to save: A customer's savings account balance is visible from the opening screen. It costs nothing to transfer money in to or out of the Money Vault. Even better, the account will tell you how much liquidity the account holder needs to have in his or her account. If there is more cash than month, then GoBank might suggest a quick transfer into savings.
ATM locator: There are 42,000 free ATMs in the GoBank network. It looks like they are using some iteration of google maps to let people search for any nearby free ATM. With a regular bank, you would have to travel to the ATM locator screen and then type in a zip code, whereupon you might get a list of branch addresses.
Very Interesting Pricing
So upfront, let's just state GoBank is very affordable. There are four fees: an out-of-network ATM fee, a foreign transaction fee, a $9 fee to personalize your card with a photograph, and then a monthly fee. Thus, it is very possible that the only fee a person might pay in any month is the monthly maintenance fee.
Except here is the catch....paying a monthly maintenance fee is entirely voluntary. Drawing a page from Radiohead, cardholders only pay a voluntary fee. "Our research says that they will pay something if they like the product," Steve Streit commented. "I guess we'll see."
People that downloaded Radiohead's In Rainbows album made a voluntary contribution of four pounds.
The only surprise, for me, was that Green Dot's mobile checking account seems to have nothing to do with Loopt. There were two theories about the acquisition of Loopt - the first was that Green Dot just wanted to buy its project managers and programming talent - and the second was that they wanted their intellectual property to design a social prepaid card.
Well, the first theory turned out to be correct. Sam Altman, founder of Loopt, was the co-presenter of GoBank, but there are no social purchasing functions to this account. True, they have integrated Facebook with the account, but there is no opportunity to find a bargain on a nearby retail item. That's too bad, because it would have added to the Green Dot moat and it certainly would have created value for consumers.
Nevertheless, that's only one minor detraction to a product that appears to be something that could be very valuable for both Green Dot and their customers.