A Conversation with Steve Streit, Chairman, President, and CEO of Green Dot Corporation
We recently interviewed Steve Streit, Chairman, President and CEO of Green Dot Corporation. In this Q&A format we discuss the evolution of prepaid cards, Green Dot’s competitive position, and key trends in the prepaid market.
Steve Streit is viewed as both a pioneer in the financial services industry and as a passionate advocate for the unbanked and underserved communities. He is founder and chief executive of Green Dot Corporation, bringing the category of prepaid/reloadable debit cards to retail stores more than a decade ago. Green Dot has since built upon this legacy and grown to become a financial services company that provides a broad assortment of personal banking products and services to low and moderate income Americans through multiple distribution channels.
In 2011, under Steve’s leadership, Green Dot became a bank holding company with the purchase of Bonneville Bank in Provo, Utah. Following this acquisition, Green Dot expanded its product offering to include GoBank, its FDIC-insured checking account.
1. Given the flurry of M&A activity and partnerships rising in the prepaid space, how does Green Dot view its current market position and opportunity?
Green Dot has been one of the consolidators in the prepaid space, with our acquisitions of AccountNow, Achieve Card and other smaller companies. After Green Dot and NetSpend, there are only six or seven small players that are stand-alone prepaid companies.
Prepaid is a business that thrives on scale. All aspects of the supply chain – customer contact, risk management, product development, technology – perform better at scale. As we add to our scale, we are able to drive down costs to the end user, which will benefit Green Dot and its customers over time. Clearly others have tried to generate similar scale in prepaid, companies like American Express and JPMorgan Chase. I think it’s a challenge for traditional banks to succeed at scale in prepaid because the customer that’s looking for a prepaid card isn’t normally inside the bank branch and may not identify with the traditional bank’s brand or offerings. So, it’s a bit of a tough match for the bank and the customer. In any event, based on how things have turned out during this past three year period of intense competition, we feel very good about our position in the market.
2. What is your general view of the pace of cardholder awareness and adoption of prepaid? Where is prepaid in the payments “product life-cycle”?
We are still very early in the evolution of the prepaid market, even though the product has been around for nearly 15 years. If you think about the concentric circles in Buddhism, we are “far from the center,” certainly not at Nirvana yet. For core prepaid users, the product is familiar, even old hat. But there are so many more potential users still learning about the product. Out of the 70 to 80 million underserved customers who could benefit from a low cost, easy to get product, only 10 – 12 million prepaid cards are outstanding. We feel like we have a tremendous long term growth opportunity in prepaid with that remaining market that is perfect for the product, but may not yet be familiar with its virtues.
3. Many readers are familiar with your strategic partnership with Walmart, but can you tell us a bit about the other channels and partners which Green Dot serves?
Green Dot operates and is organized like a technology company. We are an Agile based company and go to market through Agile “Stacks” that build and manage the products and Agile Channels that sell those products. While I can’t share everything we are doing, some of the better known products include (i) the Walmart Money Card; (ii) the Green Dot branded Everyday Visa and Everyday MasterCard, (iii) our GoBank checking account, and (iv) the Green Dot reload network, a technology and services organization that supports over 200 prepaid programs. Then, those products are sold through key channels like retail, online/direct and Technology Enabled Solutions (TES), which is a new channel that provides integrated programs for lending organizations and companies in the on-demand economy. Finally, we are very excited about our recently-announced Green Dot Money, an online marketplace that intends to serve as a matchmaker for low-to-moderate income consumers looking for fair and affordable loans.
4. How is Green Dot viewing the regulatory environment for prepaid?
Throughout its history, Green Dot has had an active and progressive government relations strategy, which has contributed to our success and the success of the industry at large. We think the CFPB is on the right track with prepaid, looking at disclosures to allow consumers to compare products and seeking to limit potentially harmful tactics around overdrafts and other practices. As we and the rest of the industry get on the same page with the regulators, it is helpful because it reduces some of the uncertainty around the business. In that respect, the industry is in a much better place now than it was three years ago.
5. Looking forward, how might the prepaid category evolve in terms of partnerships, reach, integration with other payment products, etc.?
We think the future for prepaid is very bright, particularly for Green Dot. We plan to continue delivering exciting products, creative features, innovative technology, and increased value for our customers.
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