Post Loopt acquisition, Green Dot announces Gobank, the first mobile-only bank

Green Dot, a pre-paid debit card provider, announced and teased its first ever mobile-only banking solution, Gobank.

For those of you wanting to see a revolutionized banking industry, allow us to introduce Green Dot’s Gobank, a mobile-only, penalty free banking solution unveiled at Green Dot’s press conference in San Francisco today.

Those of us with commercial banking accounts know a thing or two about fees . To maintain a checking or savings account, these payments are small but it add up over time, and penalties will hit your wallet even harder. Green Dot CEO Steve Streit says that over $30 billion in penalty fees were collected by banks last year, and unlucky souls who opened new accounts could have added another $30-$50 on top of that. 

This is where Gobank comes in, with a completely free mobile banking solution. In case you aren’t quite grasping the concept, that means there are not brick-and-mortar locations you can visit. All activities, including deposits, sending money to friends, and transferring money between types of accounts, can be done via smartphone. The only non-mobile service that Gobank offers is a tangible debit card and 45,000 Greendot ATMs across the United States. In other words, you’re more likely to find a Greendot ATM than ones from Chase or Bank of America.

The app itself has four major features. Like Chase and just about every bank with a mobile app these days, you can deposit a check that gets sent straight to your checking account with a picture, front and back, of the check. Second, you can store away some money for a rainy day or toward a vacation fund that you can’t spend, which Gobank calls the “Money Vault.” Think of it like Gobank’s version of a savings account, but it’s fee-free and customizable.

Sending money is a social experience on Gobank. Friends can be notified via SMS, email, or Facebook about a money transfer between Gobank accounts. If your friends don’t have Gobank, then the process defaults to a Paypal facilitated transfer.

The most entertaining feature that Streit and Greendot EVP of mobile products and technology, Sam Altman, appeared to be proud of is Fortune Teller. “We have a philosophy that tech is entertaining,” Streit tells me. Consumers expect apps to be entertaining.” With Fortune Teller, users are able to set budgets and billing options for any recurrent payments they may have, including monthly insurance payments, utility bills, or rent. Based on this information, Fortune Teller is like your digital personal finance angel. Say you want to purchase a Macbook; Gobank will tell you whether or not it’s a smart investment based on your budget.

Users can be issued a tangible debit card for $9 that can be used for daily transactions. And it works with Square and other payment processing services. To take this service a step further into “fun” territory, Gobank customers can elect to receive a personalized debit card with a picture of their choosing from their mobile device’s library or even from Facebook.

Now where Gobank really sets itself apart from competitors is its groundbreaking audacity to charge its users absolutely nothing to maintain a Gobank checking account. Green Dot is (pardon the pun) banking on the confidence that some users will pay up to $9 per month voluntarily just because they love the app and want to throw their support behind the app. There aren’t even any overdraft charges to penalize you should you accidentally spend more than you have. Streit says that Green Dot expects people that overdraft will pay back what they owe.

Gobank will also make money by collecting a cut from merchants for every time a customer uses their Gobank debit card. There’s also revenue for Gobank in value-added services like the purchase of the debit card, and float income.

Gobank is a two year work in progress for Green Dot that required the prepaid debit card company to purchase a Utah bank back in 2011 and then the mobile location-based app Loopt in 2012. So despite the challenges of convincing consumers that a bank can be mobile-only, Streit assures me that Gobank isn’t just an experiment. Green Dot has a lot invested in (and riding on) its attempt to evolve the model of modern personal finance — which is perhaps the most difficult industry to change.