By Philip Ryan, Bank Innovation
Wondering what happened to GoBank? It turns out Walmart happened.
Investors have expressed anxiety over Green Dot's future lately. The prepaid leader was set to renew its contract with notoriously tough negotiator WalMart in 2015. At the same time, Green Dot's mobile bank account, GoBank, appeared to be foundering, changing its terms and conditions and going dark on its social media channels.
Now much is made clear. The New York Times reports that GoBank will be WalMart's bank, offering checking accounts "to almost anyone over 18 who passes an ID check." That's quite a turnaround for GoBank, which has restricted access to its accounts all summer.
The accounts, currently being piloted in Texas, will be available nationwide by the end of October, according to Walmart.
It's not clear what this will mean for Walmart's own Bluebird prepaid account, offered with American Express.
From the Times:
Walmart has been eyeing financial services for some time. Two years ago, the company announced a partnership with American Express to offer a prepaid card and debit accounts. Retailers like Target and 7-Eleven also offer prepaid cards.
But the new Walmart initiative will be the first full-blown, off-the-shelf checking account. To help attract customers, Walmart and Green Dot will forgo a screening system many banks use to vet potential customers and rely instead on a proprietary system. The model is expected to allow almost any consumer who passes an identification check to open an account in minutes, according to Green Dot.
In the past, Walmart has tried to secure a federal bank charter to become a deposit-taking bank, but abandoned that effort in 2007 in the face of opposition from the banking industry. Since then, the retailer has assembled an array of services that could be offered without a charter, as well as partnerships with financial service companies like Green Dot.
ICBA Statement on Wal-Mart Offering Checking Accounts
Washington, D.C. -Camden R. Fine, president and CEO of the Independent Community Bankers of America® (ICBA), issued this statement today following Wal-Mart's announcement that it's preparing to offer checking accounts in stores nationwide.
"The nation's community banks have offered low-fee and no-fee basic checking accounts for decades. Meeting the financial needs of citizens in thousands of communities across America is at the heart of the community banking business model.
"So the message is simple: if a retailer like Wal-Mart is going to serve as a conduit for offering checking accounts and other traditional banking services, they need to know their customer and protect the customer's financial health just as is required of all banks. This means that these accounts should be subject to the same legal and regulatory framework, consumer protections, and oversight as traditional checking accounts offered by banks.
"Federal and state regulators need to take appropriate steps to ensure Wal-Mart banking services comply with all appropriate banking laws and regulations, including consumer protection and federal deposit insurance. Further, policymakers should insure that Wal-Mart is in compliance with all state consumer-protection and other applicable laws.
"Our nation's policy makers have separated the business of retail from the business of banking for a reason, for which the wisdom of such policies became crystal clear during the Great Recession. If consumers are interested in checking accounts, they can look to their local community bank for the best possible customer service that's based on the time-tested community bank relationship business model."
The Independent Community Bankers of America®, the nation's voice for more than 6,500 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit www.icba.org.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.