The data aggregator Plaid and the challenger bank Green Dot are teaming up to provide financial services to consumers who have little or no access to them.
Green Dot, in Austin, Texas, has a $3.9 billion-asset banking unit that offers basic banking services to consumers through 90,000 retail locations including Walmart stores. Its customers tend to be gig workers and people paid by the hour.
Their annual household incomes are between $25,000 and $100,000 and skew heavily in the $25,000 to $50,000 range, according to Abhijit Chaudhary, chief product officer at Green Dot. The federal poverty line for a family of four is $26,500.
“They've been burned — they've had bad experiences in other institutions, or experiences that were not catered for them to solve their needs,” Chaudhary said.
The partnership is intended to make Green Dot a stronger competitor with banks, hundreds of which have signed similar agreements with Plaid. Green Dot Bank will now use Plaid Exchange to let users of its Go2bank digital bank, which was launched in 2021, connect their bank account to the apps of the 6,000 fintechs that pay Plaid for bank account data. Plaid will feed data directly from Green Dot Bank to the fintechs using application programming interfaces, so these users won’t have to enter their online banking username and password into the fintech apps.
“The work that Green Dot is doing is really important, because it overlaps with that [underbanked and unbanked] demographic,” said Ginger Baker, head of financial access at Plaid. “It's extremely difficult to reach.” She estimates that 25% of people in the U.S. are underbanked and 10% are unbanked.
Baker defines “underbanked” as people who may have received some kind of payment into a financial account in the past, maybe for salary or a government distribution, but “it's not a tool that they find accessible, easy and relevant in the way that they live their lives,” she said.
Green Dot reaches the underbanked through search engine optimization campaigns, social media partnerships and direct mail campaigns, as well as a network of tax preparer shops that let people receive their refund in a Go2bank account. The company does not disclose how many customers it has.
Go2bank provides a checking account, savings-based rewards and a secure credit card with a $100 deposit. Green Dot also offers some Experian tools people can use to understand how to improve their credit score and lock their credit card.
The underbanked customers who use Green Dot’s Go2bank mobile app have a strong need to save money, to build credit and to improve their financial awareness, according to Chaudhary.
“Consumers are increasingly using multiple types of apps and services to manage their financial lives,” Baker said. “So they expect interoperability to exist between those services.” A survey Plaid conducted found that 80% of people in the U.S. say it’s important to be able to connect their bank account to the digital apps they want to use.
With this move, Green Dot is taking a page from the large banks that have signed contracts with Plaid to move customers’ account information with fintechs through APIs.
“In this day and age, you cannot control where a customer's going to move money to or push money from,” Baker said. “It's extremely important to give them that freedom, that accessibility. Otherwise you're limiting that functionality and they won't be your customers anymore.”
