There was a time when a phone bank was that group of people "standing by to take your call" during a Public Television pledge drive. But now a new service from Green Dot has redefined the term; with GoBank, the phone is the bank.
The facility-less digital bank conducts business through a smartphone and a downloadable iOS or Android app. Announced just this week by Green Dot, GoBank provides a real-live, all but fee-free, FDIC insured checking account, complete with account number, debit card, remote deposit and ATM network.
Using the GoBank app, customers can send payments electronically or by check, carry out P2P transfers and deposit checks. Depending on the time and type of deposit, GoBank makes funds available that day (if it's a business day) or on the next business day.
GoBank does not charge customers for account maintenance fees or overdrafts. The only costs to the customer are foreign transaction fees, ATM surcharges for out-of-network balance inquiries and withdrawals, and a $9 charge for a personalized ATM/debit card, if desired.
From one little brick-and-mortar bank ...
GoBank is able to function as a fully fledged bank because it is connected to a fully fledged bank — Bonneville Bank ($37 million in assets), a Provo, Utah-based one-office, one-ATM, FDIC-insured commercial bank that Green Dot picked up last December with the acquisition of Bonneville Bancorp for $15 million.
Officially renamed Green Dot Bank, but with the Provo facility still operating as Bonneville Bank, the little FI gives Green Dot the power to greatly expand its reach. And that's clearly what Green Dot founder and CEO Steve Streit had in mind with the purchase of Bonneville.
In a December 2011 announcement about the deal, Streit said, "The acquisition of the bank, when added to our well-established technology, distribution, compliance, and brand assets, creates a platform for innovation we believe to be unmatched in the payments and banking space."
Bonneville's FDIC standing allows Green Dot to provide the one thing missing from almost all PRCs — FDIC insurance. This allows GoBank to offer customers the security of an account insured up to $50,000, which is also the maximum balance allowed in a GoBank checking account.
'As addictive as checking Facebook or texting friends'
Green Dot's foray into banking is a canny play for the totally digital, traditional bank-disaffected Millennial generation.
This demographic, also known as Gen Y, has embraced the prepaid reloadable card — not out of need, but rather because it corresponds with their preferences: fast, easy, focused on them.
"Most people today, and especially people under 40, aren't satisfied with their current banking options," said Streit. "Many traditional bank accounts have long and complex fee schedules with terms and conditions that favor the bank; not the customer. GoBank is made to please the customer first and foremost."
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From a GPR card, it's a short hop for Millennials to GoBank. The service combines the feel and freedom of a prepaid with the convenience of managing almost all (more on that shortly) of their personal banking on the smartphone that's practically super-glued to the palm of every Gen Y member's hand.
GoBank is intentionally designed to be "the bank account for the smartphone generation," said Streit. "Once you start using GoBank, controlling your money becomes as intimate and addictive as checking Facebook or texting friends."
Developed for Millennials by Millenials
"(O)ur goal was to reinvent personal banking and create a bank account that understands how people in our generation live, work and play and how we think about money," said Sam Altman, executive vice president of mobile at Green Dot.
The GoBank app infrastructure was built entirely by developers more familiar with mobile technology than with the buttoned-up world of banking were behind the design.
"It's not every day that you get the opportunity to bring a Silicon Valley approach to building a bank account," said Altman. "Our GoBank product and technology team is populated by digital natives who grew up with the Internet and mobile phones being central to our daily lives."
Just like the GoBank target demo.
This is not your father's bank
As befits a bank account created by Silicon Valley geeks, GoBank has a couple of quirky features. One of these is "Fortune Teller," a gamified personal budgeting tool that offers advice — and sometimes snark — to an accountholder based on her budget and bank balance.
Another nontraditional feature of GoBank is that, while fee free, it gives accountholders a "pay it forward" option, meaning that they can voluntarily pay a monthly fee up to $9.00 to fund the program and ensure that it will be available to others.
Again, this is familiar territory to Millennials, who have has been offered concert tickets, music releases and computer apps with the same pay-what-you-can approach.
The online element
Customers register online to open a GoBank account. They can fund the account (minimum $50) from another bank account, or deposit cash with a MoneyPak purchased for around $4.95 from one of 60,000 retail locations.
At registration, the customer has the option to create a personalized debit card for $9, pulling a photo from his PC's hard drive or, no surprise, from Facebook.
In addition to the checking account, GoBank also offers what it calls Money Vault — essentially a no-interest savings account that allows a customer to put money aside for big purchases or unplanned expenses.
Money can be transferred between a GoBank checking account and money vault, but this is one transaction that cannot be carried out on a smartphone. Instead, the accountholder must use the GoBank website.
But you still need an ATM ...
And then there's that other function that can't be carried out via smartphone — cash withdrawal. For this, GoBank piggybacks on the MoneyPass network used by Green Dot and owned by Elan Financial Services. GoBank ATMs also include machines on the fee-free network operated by Cardtronics, said Nick Pappathopoulos, director of public relations at Cardtronics.
According to Green Dot, the GoBank network includes more than 40,000 surcharge free ATMs across the country. The bank's app and website both provide a locator that maps in-network ATMs. Customers can also use out-of-network ATMs, but they'll pay surcharges for those transactions.
A concept like GoBank doesn't change the ATM world exactly, but it does merit a pause for thought when a little one-off FI can become the nucleus for a new kind of banking scheme with a ready-made network of 40,000-ATMs.
We'll know soon whether GoBank will resonate with its target demo. It's in limited release currently, with a wider rollout planned for later this year. For now, anyone interested in opening an account must request an invitation to do so at the GoBank website.
For more on GoBank, watch the short video below.
For more on this topic, visit the mobile banking research center.
James Wester, editor of Mobile Payments Today, contributed to this story.