H&R Block is banking on a new service called Spruce to give its tax clients banking options at tax time.
Last month, Block partnered with Meta Financial’s MetaBank to introduce Spruce, which offers customers a spending account, debit card and mobile app, as well as a connected savings account that allows customers to budget for specific goals (see the story). The company had introduced a banking service, H&R Block Bank, in 2006, but sold the business to BoFi Holding, which is now called Axos Financial.
Tax preparation chains are beginning to re-enter the banking industry to diversify their offerings to customers. This week, Block rival Liberty Tax introduced its own mobile banking service and app, DeepBlue Debit (see the story).
Block aims its service at customers who do not have bank accounts and need them for their tax refunds.
“Spruce is about building an entirely new platform that is really focused on serving the two-thirds of Americans who are in a financially unhealthy position,” said H&R Block chief financial officer Les Whiting. accounting today. “We have tax professionals who spend 12 million hours selling our existing tax period financial products and talking to clients about their intimate finances. [details]. I’m not sure there’s anything more personal than dealing with your taxes and everything that happens throughout your life, whether it’s a new job, a marriage or a divorce. All of these things really create intimate financial conversations where we get a deep understanding of our clients. Many of these clients are struggling with good financial health in all four areas of spending, saving, borrowing and planning. »
H&R Block plans to add more features to the service to help customers better manage their money. “Our roadmap, as we think about future products and deliveries, will really be based on building features and capabilities, listening very carefully to our customers now that we have the app to increase that with these 12 million hours of constant iterative conversations and feedback,” says Merlan.
Block tested the service’s features and branding with users before rolling it out, and it plans to leverage the technology during tax season, particularly when customers are deciding where to deposit their refunds.
“That’s really where Spruce fits in for these customers,” Whiting said. “The majority of them are getting a tax refund. It’s an opportunity for them to have that refund deposited into a new account that does a number of things. First, it’s an opportunity to kick off that path for maybe be a little bit better off with money. Oftentimes a lot of these customers come in and in their minds they’ve probably spent a lot of that money, catching up on some bills, various things that they owe But what we think Spruce offers is the ability to get access to a no-fee or no-fee banking product with a whole set of tools built around savings recommendations.”
Customers will be offered the option of depositing their tax refunds into a Spruce bank account. A personalized refund recommendation tool called Leaf guides customers through interactive conversations.
“We take a lot of the data from this client’s tax return,” Whiting said. “We’re augmenting that with a really simple user experience. Leaf is an automated process that helps us make a recommendation of where that customer should use that cashback, and then set very specific savings goals for when they want to see that money. We’re doing a lot of really cool stuff to make it easy to use, showing graphics and various things that add a bit of interest and intrigue. It’s good to have a little fun with managing your finances. Not everything should just be painful, which is often the case with much of the bank’s legacy technology. We’ve spent a ton of time and effort making Spruce really easy for everyone to use.
Block will be competing with many other players in the banking industry who offer their own mobile technology and accounts into which they can deposit their refunds.
“The reality is that we know customers have a lot of choice, and they have a lot of different bank accounts and a lot of different financial products in their wallet,” Whiting said. “Competition these days, for many, is often just a click away. It’s not necessarily crossing the street anymore. It’s a click away in the App Store. We recognize that, but we value our ability to be at the forefront of the consumer’s mind when they ask, “What am I going to do with this tax refund?” And this is an opportunity to maybe do something a little different from what I did last year.
This tax season promises to be particularly difficult for many taxpayers and tax professionals who must deal with changing rules regarding child tax credits and economic impact payments, as well as arrears and understaffing at the IRS; and expiring provisions like Employee Retention Credit.
“The last few years have been incredibly tough on taxes for everyone in the industry,” Whiting said. “It’s really important that clients get help filing their returns electronically on time. It’s one of the reasons you see our main spot where we’re introducing Spruce this year to our DIY products for customers who choose to do their own taxes online. Many of these clients also use some of the additional services we offer when they want a review by a tax professional. A real tax professional will review this return for them online just to make sure they’ve maximized everything they put in there, and then Spruce is an option to find out where they’ll direct that tax refund.
The Spruce account comes with a mobile wallet that can be used while customers wait for the physical debit card to arrive in the mail. The account allows customers to set savings goals and includes a cash back feature, as well as alerts on their spending and purchases.
Like many banks, Block will also encourage Spruce customers to have their paychecks deposited directly into their account. “They get a few immediate benefits from doing this,” Whiting said. “The first is that they’re going to have the benefit of having their paycheck paid two days early, and that’s a feature that some of the challenger banks have, and frankly everyone should have access to.”
Another feature is overdraft protection. “We offer what we call ‘courtesy coverage’, which is free overdraft protection,” Whiting said. “So for customers who come in by chance, despite all the tools where we’re trying to help them understand where they’re at with their spending, whether they’re at an ATM or whether they’re in the store to make a purchase , if that Netflix bill comes in and you’re missing a few dollars, we’re here for you. We’ll clear that transaction. We’ll allow you to have an overdraft up to $20. It costs absolutely nothing. And most importantly still, if ever there’s a weird case situation where your account is overdrawn, maybe even over $20, we don’t even have an overdraft fee, so you’ll never see us charge to our clients anywhere range from pesky to outrageous overdraft fees that far too many banks charge today.
One advantage that most banks have is a network of ATMs. H&R Block will not install ATMs in its stores, but the company does offer access to the Allpoint ATM network.
“We don’t have ATMs in our stores today, but what we’ve done is provide our customers with access to the largest network of toll-free ATMs in North America,” said Whiting. “Our customers will have access to over 55,000 ATMs where they can get cash free of charge – no charge from us and no charge from the ATM operator. That’s a huge plus.