Green Dot Considers Licensing Its Loopt Geolocation Patents

In the wake of its Loopt acquisition, Green Dot Corp. is considering licensing its technology unit's geolocation patents to retailers and financial services companies.

The Monrovia, Calif.-based company completed the Loopt deal earlier this month (see story).  Among other potential services, the technology allows Green Dot to send out deals to smart phones when a user is walking past a particular store.

"I wouldn't say it's a new line of business, but I would say it's clearly an asset and one that we view as being strategic," Steve Streit, Green Dot chief executive, said in an interview.

Green Dot's hopes for Loopt go far beyond monetizing its patents, Streit says. The company sees its acquisition as key to a business strategy based increasingly on mobile distribution. The prepaid provider will rely on tablets and smartphones to develop its branchless bank model, which it has pursued since its acquisition of Bonneville Bancorp last year (see story).

Green Dot is betting that the technology will supersede consumer desktop and laptop computers and aid Green Dot in gaining new customers and further engaging existing ones.

"We believe that many younger consumers will skip this step of buying a computer altogether and will simply start out their adult life with a mobile device and perhaps a tablet," said Streit, on a call with investors. "And older consumers, like me, will continue to evolve our behavior to become more and more cloud-based mobile-centric, and less and less hard drive computer-based-centric."

Loopt, which Streit calls "Green Dot North," will become profitable for Green Dot in the beginning of next year, according to the company. That's around the same time that the mobile apps and new technology resulting from the Loopt purchase will be offered to Green Dot's customers.

The acquisition and the company's mobile strategy gives Green Dot a chance to compete with larger, more entrenched internet banking providers, such as ING Direct, says Wedbush analyst Gil B. Luria.

Green Dot Bank has the potential to improve on ING's model, Luria says, by marketing its checking account through retail stores. Today, Green Dot has relationships with Wal-Mart and 7-Eleven that places its prepaid plastic on those retailers' shelves.

Buoyed by growth in the number of active cards, Green Dot Corp. reported first-quarter earnings of $17.1 million, up 35% from the same period a year earlier (see story).

A longer version of this story is on AmericanBanker.com.

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