Financial innovation might have been blamed when the credit crunch struck in mid-2007 but consumers’ greater mobility and acceptance of technology has led to new financial services firms being formed and changes in incumbents.
One of the most closelywatched is the largest retailer in the US, Wal-Mart Stores, which has been creating a de facto bank and made a strategic investment in prepaid debit card provider Green Dot ahead of its flotation in the summer.
Green Dot raised a more-than-expected $164.1m at its flotation – two months after Wal-Mart invested, with no intention of selling its 2.2 million A shares in the company that manages its prepaid card business.
Green Dot created reloadable prepaid Visa and MasterCard debit cards to serve the more than 50 million Americans who cannot get or do not want credit cards.
For Green Dot’s financial year to end-July 2009, the company had revenues of $234.8m and net income of $37.2m.
The largest shareholder in Green Dot is US-based venture capital firm Sequoia, which owned 35.2% of the B shares after the flotation. Sequoia partner Michael Moritz is on Green Dot’s board.
Moritz is the legendary investor in Google, as a result of which Sequoia saw its $12.5m investment increase to $2bn at the internet search group’s IPO.