Traditional financial service providers have historically been inefficient at best and, at worst, predatory when serving Hispanic immigrants, Amir Hemmat, co-founder and CEO of Welcome Technologies told Banking Dive.
That's some of the motivation behind the company’s push to create PODERcard, a bank account and Visa card product aimed at giving that segment of the population better access to digital banking services.
"Frankly, we've seen a very half-assed job across the industry," Hemmat said. "This is not a demographic that they’re focused on at all."
Green Dot partnered with Los Angeles-based Welcome to launch PODERcard last month.
A Welcome Technologies survey of 10,000 immigrants found 31% of respondents borrowed from traditional banks when they needed a loan, suggesting they may not be comfortable working with mainstream providers, a company press release said.
Some of the biggest U.S. banks sign up healthy swaths of Hispanic immigrant customers, but those companies were not built with that specific audience in mind, and their products lack the customization Hispanic immigrants need, Hemmat said.
By the same token, challenger banks typically target what they may feel is an underserved customer base. Chime and N26, for example, gear themselves toward a millennial or Generation Z audience.
Several challengers — Remitly, Stilt and Majority, among them — already aim to serve the immigrant market. The fintech startup Nova Credit is helping American Express tap into immigrants' credit histories. But perhaps no immigrant-focused banking effort has a partner with the reach of Green Dot.
Green Dot issues and manages the U.S.'s largest prepaid account program, Walmart's reloadable MoneyCard. More than one-third of Green Dot's revenue in some fiscal quarters last year came from sales at Walmart’s stores. But Green Dot sees the opportunity to make inroads into the Hispanic immigrant market.
"We're looking forward to helping those families enter the mainstream financial system," Seth Ross, Green Dot's chief of enterprise partnerships, said in a press release.
George Sutton, an analyst who covers Green Dot for Craig-Hallum Capital Group in Minneapolis, called the Welcome partnership "a perfectly-timed offering for a huge addressable market."
Hemmat, in a release, described PODERCard as "more than just a debit card or mobile bank account — it's one of the first of many steps our users will take to secure a more financially stable future for themselves and their families."
Before entering banking, Welcome spent years testing financial services and education to learn what works and does not for the immigrant community, Hemmat said.
Welcome Technologies' digital platform, SABEResPODER, serves about 2 million members, the company said.
The challenges for growth will be twofold for Welcome, Ron Shevlin, director of research at Cornerstone Advisors, told Banking Dive.
First, consumers typically don't go to nonfinancial service providers for their financial services. "That's slowly changing, but SABEResPODER will have to continue to grow its usage base and convince that base that they're a legitimate provider of banking services," Shevlin said.
Second, the company needs to provide excellent customer service.
Taking on those challenges, Hemmat said, starts with trust — something he said Welcome has established in the Hispanic community.
"A lot of people turn to traditional institutions for their financial services, but when you dig into the data as we have, you see there is general displeasure with the old infrastructure," Hemmat said. "There's a lot of room for us to create disruption from the standpoint of improving the experience, improving fee structures and improving customer service."
