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GoBank Wants Your Mobile Phone To Replace Your Bank

It's the first truly mobile, online-only bank.

Posted on October 11, 2013, at 10:45 a.m. ET

When Steve Streit, the CEO of the prepaid card company Green Dot, spoke at a financial technology conference hosted by Goldman Sachs, he did something a little strange — he said that Occupy Wall Street liked his product, and that was a good thing.

"The attitude of GoBank is very intimate and contemporary. It's the bank of the Occupy Wall Street movement," Streit said. "It's meant to be a very pro consumer, not popular in this room."

Whether activists have actually adopted the GoBank savings account as their preferred banking product isn't exactly clear. But GoBank, the online-only bank launched by Green Dot this summer, is squarely aimed at incumbent banks.

GoBank is a real bank: Green Dot purchased Utah-based Bonneville Bank, renamed it GoBank, and then put a mobile-only user interface on top of if that allows customers to deposit checks, see their balance, transfer funds, and use any of Green Dot's more than 40,000 ATMs with no fee.

The user interface used by GoBank grew out of the mobile location startup Loopt, which Green Dot bought for $43 million in March 2012 as a backdoor way to hire its two founders, Stanford grads Sam Altman and Alok Deshpande. GoBank opened for business to the general public in June and while they haven't released any user data, Deshpande told BuzzFeed that, "We've been pretty thrilled with the overall reaction."

"We've gotten a lot of people to get the message that we're building something that's really simple and delightful to use," he added.

The basic idea behind GoBank is that everyone loves their mobile phone and uses it all the time, but they hate their bank and only interact with it when they have to. So, Green Dot went out and bought a bank and designed it with no branches, no tellers, and with nearly all banking, like deposits, money transfers, and balance inquiries, done through its app.

Besides having a mobile app that's intimately tied to banking, GoBank has distinguished itself by having only a few, simple fees. There are no overdraft fees. A standard debit card is free (you can get one customized with a photo from Facebook for $9).

There aren't any monthly fees, although users can pay an optional fee of up to $9 a month. The revenue instead comes from interchange fees, fees merchants pay to banks when they process debit card payments, a $2.50 fee for using a non-GreenDot ATM, $1 balance inquiry fee at non-GreenDot ATMs and a 3% surcharge for foreign purchases. And Desphande says that some users really are paying the voluntary fee: "We haven't announced the amount, but they are liking the product and choosing to pay us." Deshpande said that older women tend to pay the most.

While GoBank doesn't offer anything close to the full suite of banking services one might expect to come with, say, a Wells Fargo or Chase checking account — GoBank isn't doing home loans or retirement savings — the focus now is getting as many people signed up for a product that can do the majority of their personal banking simply and cheaply.

"We're hearing for what 90% of people are doing with banking it works," Deshpande said, "We've gotten a lot of the way there in terms of making a best in class checking product, you can get funds in, you can deposit on the spot, it's really transparent."

One thing that customers have complained about is how GoBank handles personal checks. When GoBank launched, it would hold personal checks for up to 10 days. Desphande said that holding large personal checks for new customers was a standard practice in the banking industry and that corporate and government checks, like payroll and benefits, got processed quickly. He said that the longer customers banked with GoBank, the quicker checks would be processed.

"We'd rather do fewer things really well than do a lot of things badly," Deshpande said.

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