WASHINGTON – The prepaid card giant Green Dot is getting into the matchmaking business.
Founder and Chief Executive Steve Streit said Tuesday that Green Dot will soon launch a service that uses nontraditional data to pair bank lenders with borrowers. Similar to Green Dot's prepaid cards, the service will be largely aimed at consumers with little or no access to traditional bank services.
The goal will be to "take somebody who may not have had a [credit] score but still get them a good loan at a fair price…something that is transparent and at a monthly payment they can afford," Streit said during a financial inclusion forum held at the U.S. Treasury Department and co-sponsored by the U.S. Agency for International Development. The service, he added, "can provide liquidity to a segment of America that just doesn't have choices. It is a payday loan or nothing."
Green Dot will be joining a number of new businesses that rate borrowers' creditworthiness and facilitate loans using alternative data. Crunching such data has become easier in recent years as data mining and analytics becomes more advanced.
Streit said that he believes the service will be attractive to community banks that are eager to find ways to reach unbanked or underbanked consumers. "A lot of community banks…they don't have the resources or the technology to reach out and do the things that big companies can do," he said.
He added that Green Dot – which itself has a bank charter and is regulated by the Federal Reserve Board – will "play the role of cop," leveraging its compliance team to set the "playground rules" and will vet lenders for borrowers and vice versa.
At the same event earlier in the day, JPMorgan Chase CEO Jamie Dimon said that the country's largest bank also has plans to expand into new areas of lending using alternative data.
"We haven't announced it yet, we're going to be doing a thing with one of these peer-to-peer, small-business lenders," Dimon said. "You can use big data, all this other data, non-traditional data, [to] determine whether someone is a good credit or not."