GoBank: At the Intersection of Smartphone and Banking

Green Dot, the nation’s largest provider of prepaid debit cards, wants to be to the banking industry what the iPod was to the music industry – disruptive. In a report by Mashable’s business reporter Seth Fiegerman, Green Dot is launching GoBank, a new bank account specifically designed from start to finish for smartphone-savvy customers.

With GoBank, one won’t find a branch or a teller. Instead, users will find a rich mobile user-experience, a partnership with WalMart for making deposits, and access to 40,000 fee-free ATMS around the country (“…more than twice the size of Chase or Bank of America”, according to Green Dot press release). And, from a “how safe is my money” standpoint, GoBank is also FDIC insured.

The genesis for GoBank was tapping into consumer dislike of banks and fees.

According to Green Dot executive Sam Altman, who was quoted in the Mashable post, “We have tried to bring everything we always wanted in a bank and take out all the things we hate about a bank.”

As summarized in parent company Green Dot’s press release, GoBank intends to eliminate some those major banking irritants: no overdraft fees, no penalty fees, no minimum balance requirements, and no required monthly fees.

In its place, GoBank only has four fees: using of out-of-network ATMs, using debit cards abroad, customizing a debit card and upfront membership fees.

To that end (and taking a lesson from the Radiohead model of asking users to determine how much they are willing to pay for a monthly fee, says Mashable’s Fiegerman),  GoBank customers decide up front how much they want to pay for the membership fee, from nothing up to $9.

As stated in Green Dot’s press release, “Allowing the customer to voluntarily pay what they think is fair gives the customer the power to punish or reward GoBank based on how they feel about the product. This provides an emotional benefit for the member because it puts them in control of their bank.”

Other features of GoBank:

  1. Mobile first: customers can easily set up accounts from their phones using GoBank’s mobile website or iOS and Android apps.
  2. Payments: They can send money to friends via email, text and Facebook.
  3. Customization: GoBank lets people customize their debit cards with a photo, even one taken from a user’s Facebook account.
  4. Guide: users can turn to the Fortune Teller feature in the app to determine whether to make a purchase based on current budget.

GoBank joins other online-only bank players Simple (formerly BankSimple) and Bluebird (a joint venture from American Express and Walmart).

With GoBank, Green Dot is betting consumers are frustrated enough with existing big banks and fees to consider switching. The hope for Green Dot, which had 4.4 million active prepaid accounts as of last quarter, is that adding GoBank to the mix will expand its customer base.

GoBank is currently available in beta and will accept around 20,000 users in the next couple months before launching publicly.

As Green Dot’s Altman points out in the Mashable post, the new bank account isn’t for those who prefer bricks and mortar. Instead, Altman suggests, “If you live on Facebook and your phone all the time, then we’re probably a great choice.”

Or, if you look at GoBank’s tagline, “It’s about time.”

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