Dan Henry, the new CEO and President of Pasadena-based financial technology and bank holding company Green Dot Corporation, said the company will shift to a strategy of relying more on its banking service and less on promoting its traditional products to increase profits, a report in the banking and financial services publication American Banker said.
Henry came on board in March to “lead Green Dot into its next chapter,” as former CEO William I. Jacobs said.
Jacobs formerly served as interim CEO and continues to serve as Chairman of the Board of Directors.
At Green Dot’s first-quarter earnings call Monday, Henry said Green Dot has traditionally launched a new product every year, and then promoted that product. He indicated he wants to reduce marketing spending and instead offer a more consistent product set through its bank subsidiary that customers could use for a longer period of time.
“I think what you’re going to see is kind of a philosophical change in the approach in terms of consumer marketing,” Henry said.
In the call, Henry said he has been spending the past few weeks since coming on board speaking with the company’s leadership, although most of the engagements have been virtual due to work-from-home requirements.
He said he and the leadership team have been working aggressively to eliminate unnecessary expenses, and so far have reduced planned SG&A (selling, general and administrative) expense by close to $30 million for the remainder of the year.
“These reductions in expenses will not impact our ability to serve our partners and customers more while we expense reduction hinder our future growth,” Henry said. “Consequently, when we all emerge from this current economic situation, Green Dot will be a leaner, more efficient operation.”
Henry made sure Green Dot is not selling its banking subsidiary, Green Dot Bank – also called GoBank and Bonneville Bank – and instead use the asset more to help boost profits.
“The intention is to be focused on delivering a consumer banking product that will create lasting value for the mass market consumer in this country,” he said. “We will take full advantage of our bank charter, retail distribution and direct-to-consumer capabilities. I believe the reason we are seeing such an abundance of so-called challenger banks pop up is because both NetSpend and Green Dot squandered their advantages in this space over the past five years. We will be working hard in the coming years to regain that lost ground.”
During the call, Green Dot reported first-quarter net income of $46.8 million, down from $64 million in the same period last year. Henry said the company was fortunate to have banked the first quarter before the COVID-19 emergency hit the economy.
Green Dot shares have climbed by more than 50 percent since March when Henry was announced to be coming on board as CEO. Early Tuesday, they were trading at $35 per share, up about 14 percent from Monday’s closing, American Banker said in the report.