Two leading alternative providers in the banking industry, Alex Sion, president of Moven, and Lewis Goodwin, president and CEO of Green Dot Bank, say they are poised to take market share away from traditional banks.
Two-year-old Moven launched a mobile banking app in May that markets itself as a simple alternative to banking. When Sion, a former Citibanker who once built a digital brokerage platform, took the job at Moven, he told American Banker, "We're heads down and hell bent on changing the world of banking."
Green Dot Bank, which was created when Green Dot bought Bonneville Bank in 2011 for $15.7 million, offers a mobile app called GoBank that provides a reloadable card, a Green Dot demand deposit account and a Walmart MoneyCard. Green Dot CEO Steve Streit has said he wants the bank to become widely regarded by customers, consumer advocates, regulators and legislators as the most pro-consumer and widely accessible financial institution in America.
Both see themselves as disruptors.
"My philosophy is if you are not a disruptor, you will soon be a disruptee," Goodwin said during the closing session of the BAI Retail Delivery conference. "If you wait around and let everything happen around you, the world will change dramatically and you won't be able to catch up."
Moven's founders, Sion and Brett King, see the future of the deposit payment product as an app that helps people stay in control of their money and get feedback on everyday spending behaviors so they save more. "There's not another product in the country that's organized that way," Sion says.
Banks, of course, do have apps that provide the user with views of their spending and alerts when they cross a budget or spending threshold.
What's different about Moven, according to Sion, is its philosophy about money management.
"What I learned at Citi is as soon as you talk about budgeting, you alienate about 80% of human beings," Sion says. "We spent a lot of time and money at Citi thinking about that problem. To us it became an idea of behavioral patterns. I don't care if you budget, I care that you're mindful of your daily spend and mindful of those moments of spending." He compares it to the way the Fitbit wrist band tracks the wearer's physical activity, without judgment but with awareness.
"Every time you make a purchase, you get feedback on your spending pattern about a second later from Moven," Sion says. "What did that purchase mean? Are you doing well or not? How much have you spent on lattes this month?"
You could call it being motivated by guilt. Sion calls it "positive reaffirmation."
Moven also lets customers pay Facebook friends through its app. "You spend money in and around your friends, so it was obvious to us that you needed to connect the two, just because that's the easiest way to do it," Sion says.
Green Dot issues prepaid debit cards through 80,000 retail locations; to date it has issued 4.5 million cards. "We didn't rely on a bank network, we let people go where they shop, get these cards 24 hours a day, register them, and have immediate access to these funds," Goodwin says. "We felt we could put something out there that would give people who have never written a check a reason to never write a check," Goodwin says.
Green Dot's GoBank app is targeted toward the digital native: 18-to-34-year-olds that have no desire to come into a bank branch. "We have a branch, and I never see a young person come into it," Goodwin observes. Customers can sign up for GoBank directly from their mobile devices.
One unique feature of GoBank is its fee structure: customers choose their own monthly fee, ranging from nothing to nine dollars, and are given the option to reset that fee every month. Goodwin calls these "tips." He won't share what the average tip is, but he says it's not zero.
Moven will not share customer numbers but Sion says the company has been growing its consumer base in a "healthy but controlled" way, Sion says. The product is still invitation only, and the company has been letting new customers open accounts in small blocks. "At times we've paused altogether adding new customers so we could get to certain issues and understand things along the way," he says.
"The whole idea was to grow our basic customers quickly, to prove scale and have a true beta where people could use and get feedback and we could really engage customers," he says.
Two weeks ago, the company launched the latest version of its app, with the new ability to turn off a debit card remotely and a tweaking of the behavioral analytics behind the app.
"Now we understand what the app is, where we're going," Sion says. "Now it's about how to market it, how to grow our customer base. We plan to do that very aggressively but in a differentiated way," he says.
Green Dot Bank has already been through what Goodwin calls the "friends and family period."
"We've done CIP, we've done all those things in the prepaid space, so we understand how to do things in scale," Goodwin says.
Both companies offer FDIC-insured accounts (Moven through CBW Bank), submit to regulatory exams (Green Dot Bank went through nine audits before it could officially launch) and confront headwinds in trying to provide innovative services in a restricted banking environment.
"We struggle with things like opening accounts and money movement -- you're beholden to the way the financial services system works, the timing, the cadence of the processes we still have to deal with," Sion says. "We're not exempt from those things. But we try to focus on transparency -- let people know when things are happening, how they're happening, set expectations the right way and allow that feeling of control." If a payment will take several days to clear, for instance, Moven will send emails and text messages updating the customer on the status so she knows where her money is at all times.
"It's no different from what Domino's is doing with pizza delivery," Sion says. "You can get a transparent view: the pizza's in the oven, we just put the pepperonis on it and now the driver's on the way. That's where we want to go."
Goodwin concurs. "You don't control the timing of everything, so you want to make sure you message clearly what they should expect," he says. "If you don't message, they expect it immediately." When Green Dot Bank was first starting up, staff opened accounts at several large banks online and on mobile devices. "We learned a lot about what we didn't want to do," he says.
Goodwin opened an account online, went through the customer identification program, and loaded on a debit card to fund the account. "It took six days for them to get back to me at all," he recalls. "And then two more days before they released my money into my account, then eight more days before I got my card. That's friction, that's downright irritating."
Green Dot aimed to provide an experience in which customers sign up for an account in five to seven minutes, in spite of the CIP process. "That's one thing 'frictionless' means to us," Goodwin says.
