Steven W. Streit is Green Dot’s founder, and has served as the President and a director since October 1999, as Chief Executive Officer since January 2001 and as Chairman since February 2010. He also served as our Secretary from October 1999 to April 2000 and as our Treasurer from October 1999 to April 2004.
Streit recently spoke with PaymentsJournal regarding Green Dot’s current view on the market.
PJ: How has Green Dot’s role in the prepaid market evolved over the years?
SS: Back in 2001, Green Dot’s GPR card was originally introduced to provide teens, who did not have access to a credit card, the ability to shop online. When we began selling the cards at retail, we quickly learned that the product was instead being sought out by individuals who were looking for the benefits of plastic but didn’t qualify for credit cards or checking accounts. Over the past 11 years, we have seen the product evolve into an everyday financial solution for many of our customers who are seeking a reliable “portable” bank account that suits their everyday needs. We have seen evidence of that through the increased use of direct deposit, as well as the number of individuals who are benefitting each month by meeting one of our usage-based fee waiving criteria. As we continue to evolve as a company, we continue to stay true to Green Dot’s core belief that financial products should be convenient, transparent and easy to use.
PJ: More players are entering the prepaid market such as American Express and Chase. U.S. Bank has been pushing its general purpose reloadable product for some time. With that said, will the market see contraction or consolidation among providers in the near future?
SS: We see the interest from mainstream banks as a benefit to the industry, as it lends additional credibility to the industry and raises awareness of the product category to an even wider segment of consumers. We believe there is significant demand for prepaid financial services, particularly in households making less than $75,000 annually, and that this growing market can support the need for various competing products in the marketplace. That being said, we do expect to see tougher times for smaller providers, whether that be consolidation or elimination. We believe that Green Dot’s reputation for low-fee financial solutions and its strong brand and retail distribution network position us well to compete with newer players in the space and we continue to see an opportunity to grow our business over time.
PJ: With Green Dot as a vertically integrated supplier (bank for issuing, processor for payments), what advantage does that give the company in the marketplace.
SS: The acquisition of Green Dot Bank is a key part of our ability to provide better products at lower costs to our customers. The ability to issue cards from Green Dot Bank, sell those cards through our retail distribution network of more than 60,000 retailers and offer reload services via our Green Dot Network, provides us with a uniquely differentiated model that allows us to better control our cost structure, improve our speed to market, and better control our compliance obligations.
PJ: Where does Green Dot see the opportunities to expand its customer base?
SS: We believe that many of our recently announced programs—such as AARP (older Americans), RushCard (those who identify w/ Russell Simmons) and Sallie Mae (college students)—expand our reach into new segments of consumers within our target demographic. We are also in the process of developing a mobile-centric checking account that we believe will address many of the key pain points felt by a very large customer base of individuals who are frustrated with big banks. We believe Green Dot has a unique opportunity to be that financial solution for these consumers.
PJ: Given the focus of consumer groups and regulators around cardholder complaints, what can Green Dot and/or the industry do to address systemic issues such as ACH clearance and address such complaints that are now visible to the public thanks to the Consumer Financial Protection Bureau?
SS: Green Dot has always had a robust complaint resolution process and we take customer input- good and bad- very seriously. With social media so prominent, I think it’s fair to say that complaints on any product or service have already been public for some time. We’re pleased to have an A+ BBB rating and very strong customer satisfaction scores and the ongoing monitoring and reporting of complaints will help us improve even more.
PJ: What mobile initiatives is Green Dot pursuing at the moment that it can share? When do you think mobile remote deposit capture will be generally available to cardholders?
SS: We believe mobile banking will play an increasingly important role for consumers’ everyday banking needs. We have seen very encouraging adoption and usage trends for the mobile apps we have launched for our GPR platform. Since we have become a bank holding company, we have been working on a mobile-centric checking account product and we expect to launch the product commercially sometime in 2013.
PJ: Economic conditions, increased marketing and strong consumer adoption has pushed GPR into a mainstream product. However, is the industry still faced with challenges around retention?
SS: Retention is an important puzzle that no company in GPR has really figured out yet. Part of the challenge is that many customers like the “no-commitment” nature of the prepaid card and many others intentionally purchase the product for a single need or purpose. So, retention for these customer segments is likely to be somewhat elusive. However, fortunately, there are many other GPR customers who use the card as a checking account substitute and become long term users of the product. We believe that the right mix of pricing and features will continue to help grow this “retaining” segment of customers over time.
PJ: Looking forward, what are your expectations for consumer-based prepaid products?
SS: Our expectation is that the product will become increasingly mainstream and more broadly distributed in many different channels. Over time, this means products will likely have lower prices, more features and higher utility for customers. We believe Green Dot is well positioned for the future and are excited to be the leader in such an exciting and dynamic segment of financial services.
About Steven W. Streit
Mr. Streit created the pricing, packaging, and technology strategies for the sales and marketing of prepaid association-branded cards that today serves as the industry standard at Green Dot. He served as Chief Executive Officer of Green Dot Bank. Prior to Green Dot, Mr. Streit was in the radio broadcasting business and served as a programming executive at a number of radio groups, most notably AMFM radio.