The deal with the Green Dot aims to give sub-banks a direct line to Plaid’s partners

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diving letter:

  • Challenger bank Green Dot is partnering with Plaid to allow users of the Green Dot GO2bank platform to connect their bank account to the apps that pay the data aggregator for banking information, so a press release Tuesday.
  • The deal allows Plaid Exchange to act as a channel so GO2bank users don’t have to enter their bank usernames and passwords into the apps of Plaid’s more than 6,000 partners.
  • Green Dot and Plaid form the partnership as a kind of balance. GO2bank was launched early last year to reach the lower-middle income demographic. The deal would give Green Dot customers the same direct route to Plaid that many larger banks have already negotiated.

Dive insight:

Big banks like JPMorgan Chase have in recent years developed their own internal application programming interfaces (APIs) to stop screen scraping – once a dominant method of information sharing, but one that has led some banks to block data aggregators like Plaid.

Plaid Exchange launched in 2020 as an alternative to screen scraping to give customers of smaller financial institutions the same digital options and pathways as larger ones.

“Plaid is working to ensure inclusivity is the industry standard,” Ginger Baker, head of financial access for the data aggregator, said in Tuesday’s press release.

“Consumers are increasingly using different types of apps and services to manage their financial lives,” Baker said American banker. “So you expect interoperability to exist between these services.”

GO2bank’s user base is heavily biased toward hourly and gig workers and customers with annual household incomes between $25,000 and $50,000, said Abhijit Chaudhary, Green Dot’s chief product officer.

“They were burned — they had bad experiences at other institutions or experiences that weren’t tailored to their needs,” Chaudhary told American Banker.

“Our focus at Green Dot is to enable everyone to bank seamlessly, affordably and with confidence,” he said in Tuesday’s press release.

This includes an emphasis on the unbanked and unbanked, whom the Green Dot is targeting through people’s online footprints and partnerships with accountancy firms.

About 5.4% of US households were unbanked, meaning they did not have checking or savings accounts with banks or credit unions, in 2019, the Federal Deposit Insurance Corp. (FDIC) firm. However, this proportion is higher among low-income, less educated, and non-white households.

The Government Accountability Office (GAO) this month estimated that another 17.9% of U.S. households are underserved, meaning that despite opening at least one checking or savings account, they use alternative financial services like check cashing or payday loans.

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