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Online small- and medium-sized business (SMB) lender Kabbage has launched Kabbage Checking to give SMBs access to traditional checking account services without fees or friction. Kabbage claims the application process takes minutes, and the account carries no monthly fees or balance requirements.
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Customers will earn a 1.1% APY on their deposits, and other benefits include the ability to deposit cash at 90,000 participating retailers and service centers across the US, free access to 19,000 ATMs, and a Wallets feature to help track savings goals. The lender also plans to add wire transfers and mobile remote deposits later this year. Kabbage Checking accounts are issued by Green Dot Bank.
Kabbage Checking is likely to blend well with the lender’s other offerings in a way that amplifies its value to prospective customers. For example, its Kabbage Funding flexible line of credit could act as an overdraft cushion if used in conjunction with the checking account.
The lender also offers Kabbage Insights, a tool that analyzes real-time and historic transactional data to forecast cash flow and advise clients on their financial situation, and its analysis could grow more accurate if a client’s checking account also falls under the Kabbage umbrella. And Kabbage may be able to offer SMBs that use Kabbage Checking a more efficient application process for loans. The prospect of getting fast access to a well-rounded suite of financial services could help pull in businesses more effectively — to both the checking offering and Kabbage’s wider product suite — than if Kabbage Checking was the lender’s first product to market.
The new offering also represents a win for Green Dot in expanding its Banking-as-a-Service (BaaS) prowess — a timely strategy in light of the coronavirus pandemic. Green Dot has multiyear partnerships with major companies including Apple, Intuit, Uber, and Walmart. And while the nature of each of Green Dot’s partners varies widely, all of them fit the bank holding company’s high-level strategy of serving businesses with sizable customer bases (Green Dot likes to see at least half a million existing end users, its chief/enterprise partnerships Seth Ross told Insider Intelligence), as opposed to smaller startups looking to offer banking services.
Kabbage appears to fit this bill, with 200,000 business clients as of Q3 2019. Providing the critical BaaS backbone for large-scale companies puts Green Dot in a stable position during the coronavirus pandemic — and likely makes for a revenue stream that is sheltered against economic downturns due to the multiyear nature of its partnerships.
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