H&R Block’s Retail Bank App Has a Slight Edge: 21 Million Tax Customers

Tax preparation company expands its financial service offerings for potentially millions of Americans who need help saving. A package of features called 'Spruce' is built around a mobile app and debit card in partnership with MetaBank.

For many Americans tax time represents an annual reality check on their financial performance for an entire year. For H&R Block, tax time represents its base relationship with over 21 million consumers who either use its tax preparation offices or its do-it-yourself tax software.

“For many consumers, their tax refund may be the single-largest financial event of their year,” says Les Whiting, Chief Financial Services Officer at H&R Block. “That’s a tremendous opportunity for these customers to reset, to commit to managing their finances better for the next year.”

Up until now, H&R Block’s main forays into financial services have been refund advance loans and credit lines and issuance of single-use debit cards through its tax prep offices, all under the “Emerald” brand.

Now, in partnership with MetaBank, N.A., it is offering “Spruce,” a mobile banking platform. The new service is intended to bring basic banking transaction and savings accounts together in an app aligned with tools to help consumers reach savings goals. The initial rollout has been timed with the start of tax season in hopes of persuading people to open Spruce accounts with the proceeds of their refunds.

“We think of this as a way of tapping into a huge opportunity, the two thirds of the U.S. that’s not financially healthy,” says Whiting. “Many people are struggling with savings, spending, borrowing and planning.”

Spruce App Screen and Card

Among the features of Spruce:

  • A spending account tied into both the app and a debit card.
  • A connected savings account designed to accommodate budgeting towards specific goals, along with automatic transfers to savings.
  • “Nudges” built into the app to help users keep to their savings goals.
  • Early access to paychecks and certain other direct deposits up to two days early.
  • Cash-back rewards for purchases at certain retailers when people use the Spruce debit card. The automatic rewards can be set up so they pour into savings. (Spruce savings accounts don’t pay interest.)
  • Credit score monitoring at no charge.
  • Modest overdraft protection for up to $20.
  • No monthly fees no sign-up fees and no minimum balance requirements.

Putting Together a Simple Set of Financial Tools

In 2021 H&R Block introduced Wave business banking accounts for microbusinesses. Whiting, who spent about a decade at Wave before joining H&R Block, says some lessons were learned in putting together that product as a mobile offering. A key one was the need to keep language and concepts simple, avoiding “banker-speak.”

The new consumer services come at a point when more nonbanks are getting into financial services. This includes offerings such as Walgreen’s Scarlet account and the beefed-up Walmart MoneyCard.

Whiting says programs such as Scarlet are more loyalty programs that ultimately seek to increase consumer spending at those stores, rather than helping them improve their financial health. Whiting says H&R Blocks’ long brand history should help promote the accounts. He adds that the company’s tax preparation customer base represents a built-in market of prospects that many fintechs and neobanks would love to have.

Whiting says the company expects many of its tax assistance customers who obtain Emerald cards with their refunds on them will likely continue to use the cards rather than switch to the app.

Indeed, part of the idea for Spruce grew out of a slice of the Emerald-card users who tried working out of the card all through the year as a kind-of banking account. Whiting says Spruce provides a more useful alternative made for the purpose.

Spruce app typical savings goals

Spruce account holders can upload photos connected to their savings goals for an extra bit of inspiration.

While the accounts will be promoted to users of the company’s software-based DIY tax prep services, anyone can download the app from the App Store or Google Play.

Additional services linked to the accounts are anticipated in the future, according to Whiting. Down the road these could include connected retirement accounts, which often carry tax advantages, and services like subscription management. At present most of H&R Block’s income on the accounts will come from interchange fees.

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