Green Dot delivered modest growth during the first quarter as it nears completion of a two-year platform review that aims to position the bank for significant growth next year, chief executive George Gresham said Thursday. to analysts.
Prepaid cards sold at general-item stores remain one of Green Dot’s core products, but the Austin, Texas-based firm said retail traffic at those stores is slowing. Green Dot is now turning to digital channels to market diversified financial services including its Go2bank mobile banking account, movement of money through the Green Dot Network and services to access earned wages, Gresham said.
Green Dot will soon get another boost from a banking-as-a-service partnership with a large corporation that the firm plans to announce this summer, he said.
During the first quarter, Green Dot signed 350 new partners who offer their PayCard to deliver wages. It also finalized contracts to provide access to earned wages to nine employers, Gresham said.
“Together with our bank offering demand deposit accounts through all of these channels, we have a money network connected to 90,000 retail locations with shared services including fraud management and customer service and when we finish this technological work, we will be able to acquiring all of these services at scale and selling them to external partners,” Gresham said in an interview.
In the area of access to earned wages, Green Dot plans to leverage existing connections with employers through the company’s PayCard operations and its ability to directly fund employee wage advances, which is an advantage of the that many EWA providers lack, Gresham said.
“Today, access to earned wages is small for us, but the addressable market is about $3 billion and it’s a very attractive market for us,” he said. “We have 6,000 PayCard members and we also have the ability to fund early access to salaries because we have a bank.”
Green Dot hopes to be a leader in the field of access to earned wages within the next five years, he added.
Green Dot’s results for the quarter ended March 31 slightly beat analyst estimates, with revenue of $416 million, up 4% from the same period a year earlier. Net income for the period decreased 7% to $36 million, due in part to higher salary and benefit expenses, as well as higher near-term operating costs associated with the platform upgrade.
During the quarter, Green Dot also reduced its general and administrative expenses by about 12% from the same period a year earlier by renegotiating contracts and improving efficiencies, Gresham said.
Jefferies Research analysts said Green Dot’s results for the quarter slightly beat their expectations.
“Management continues to navigate complex changes at the company with an eye to returning to growth in 2024, but in the near term we expect headwinds from inflation and changing consumer behavior to continue,” Jefferies said in a statement. Thursday’s note to investors.