Green Dot on Wednesday unveiled GO2bank, the prepaid card issuer's challenger bank aimed at serving the low-and moderate-income (LMI) market.
The digital bank, which the company has been building since early last year, offers overdraft protection up to $200, early paycheck access, a high-interest savings account and access to a secured credit card, available with no credit check or annual fee.
"Too many Americans struggle to access their money, are paying too much for financial products, and are negatively impacted by the lack of solutions designed to suit their needs," Green Dot CEO Dan Henry said in a statement. "GO2bank is built to be the go-to destination for seamless, affordable, useful banking — combining the security, stability, and experience of an FDIC-insured bank with the innovation and agility of a leading fintech."
Building a consumer bank to compete with Chime, Varo and other challenger banks has been a goal of Henry since he took the helm of the company in March, following the departure of longtime CEO Steve Streit in December 2019.
During Henry's first earnings call as CEO in May, the former Netspend chief said the company planned to devote significant time toward building a product for mass-market consumers ahead of a 2021 launch.
"I believe the reason we are seeing such an abundance of so-called challenger banks pop up is because both Netspend and Green Dot squandered their advantages in this space over the past five years," he told analysts in May. "We will be working hard in the coming years to regain that lost ground."
Green Dot says it serves 33 million customers through its retail and direct-to-consumer debit card products, and also operates banking-as-a-service and debit card programs for companies such as Walmart, Apple, Amazon, Uber and Intuit.
During the call, Henry called the bank's charter "a competitive differentiator and a source of immense potential value," and an asset that has long been underused.
Abhijit Chaudhary, Green Dot's senior vice president and general manager of direct to consumer products, emphasized GO2bank's distinction from neobanks that rent a charter from a partner bank.
"This is a real bank. I see a lot of competitors — new neobanks that are essentially marketing firms because they don't have their own infrastructure," Chaudhary said. "No. 1, they are nonbank holding, and No. 2, they don't have their own tech stack. So, it would be unfair to compare against any of those guys."
Another differentiator that sets the Pasadena, California-based company apart from many challenger banks is its physical footprint, said Bill Coats, a Green Dot vice president who manages direct-to-consumer products.
Through its partnerships with retailers including Walmart, Walgreens and 7-Eleven, 95% of the U.S. population lives within three miles of a Green Dot service center, Coats said.
"We have just under 100,000 service centers where you can either add money or withdraw money nationwide," he said.
Alison Cahill Lubert, vice president of corporate communications at Green Dot, said GO2bank represents the company's focus under Henry's leadership to create a flagship product for customers that addresses multiple needs.
"[Henry's] proclamations upon joining Green Dot included a number of priorities — one of them being, instead of creating one-off solutions or products that serve a specific need, let's develop a product that's really designed to serve customers more holistically and over the long term," she said. "That was one really main priority for him, and I would say he played a huge part in deciding to take this route and initiate the launch of this new product."