What happened: The US bank Green Dot has launched a new brand specifically focusing on the opportunity of embedded finance. Arc, the name of the new brand, provides banking and payment services for brands and fintech companies in the US (Finextra).
My comment: I see it as a good sign for the US market that a bank like Green Dot is launching a new embedded finance venture. You might know this is not Green Dot’s first move. Green Dot was founded in 1999 as a direct-to-consumer bank with a strong focus on teenagers and young adults. But in the world of embedded finance, they became known for their partnership with Walmart, Uber, and other tech giants. Especially the partnership with Uber was an important case study, perhaps also because of the unpleasant end of the partnership (Payments Dive). Green Dot’s CEO has publicly mentioned that losing some banking-as-a-service clients will not affect the company badly.
Additionally, the US Fed has fined Green Dot for numerous unfair and deceptive practices (Reuters). These practices do not seem to be directly linked to their banking-as-a-service activities. But since other US regulators are taking a very close look at bank’s with a fintech or embedded finance model, the punishment wasn’t great timing either.
But knowing all of this, the launch of Arc seems like Green Dot is doubling down on embedded finance and partnerships with unregulated companies. This does not mean the industry as a whole has managed to leave the issues with consent orders behind (Consumer Finance Monitor), but perhaps this means the industry is on the right path.
