H&R Block launched its own mobile banking platform on Thursday morning, calling it Spruce.
Although it will be marketed toward tax customers initially, Spruce is designed to help anyone struggling with spending, saving, planning and borrowing. H&R Block CEO Jeff Jones said the company has studies showing two-thirds of Americans struggle with at least one of those four things.
It launched Spruce in partnership with MetaBank in Sioux Falls, South Dakota. H&R Block developed Spruce in-house, though it supplemented its development with outside contractors, enabling it to launch the product in a little more than a year.
“Our team has done something many people didn’t believe we could do,” Jones said. “When I first got to Block, people in Kansas City would tell me we’ve been talking about fintech for a long time but we never made it happen. This is a really proud day for our team, which launched this product in record time and did something the company has been talking about for many years.”
The platform helps customers set personalized savings goals and keep them. It offers cash back rewards for using the platform for purchases at more 10,000 retailers. Spruce gives access to more than 55,000 ATMs nationwide with no fees and has no minimum balance requirements, sign-up fees or monthly fees. It helps customers direct deposit their paychecks and gain access to the money faster, and customers can see their credit score for free.
H&R Block spent the past few years looking to the fintech community for inspiration. In June 2019, H&R Block acquired small business accounting platform provider Wave Financial Inc. for $405 million in cash. That acquisition helped give H&R Block more confidence to create and launch its own mobile banking platform. Les Whiting, who developed the financial services strategy for Wave, was hired by H&R Block in 2020 as chief financial services officer and put in charge of building and launching Spruce.
H&R Block asked Whiting to develop Spruce after seeing there was room in the market for the company to have its own mobile banking platform. Jones said traditional banks offer stability, but they don’t necessarily have the trust of their clients and aren’t known for technology. Fintechs are on the other side of the spectrum, with great technology but no brand recognition.
“We see Spruce playing in a sweet spot between those two,” Jones said.
Kansas City-based H&R Block (NYSE: HRB) is known as a tax company, but it also has offered a wide variety of financial services over the years.
The company founded its own bank in 2006 called H&R Block Bank. It enabled H&R Block to launch the Emerald Card, a reloadable debit card in 2007. But by 2012, the company found holding its own bank charter to be cumbersome, particularly due to the Federal Reserve Bank’s capital reserve requirements. The company closed H&R Block Bank in 2015, selling its assets to BofI Federal Bank in San Diego.
Since then, H&R Block has signed partnership deals with banks, enabling the company to continue offering the Emerald Card and other financial services to tax return customers. Metabank holds the contract. The Emerald Card will continue to be offered to tax clients, but Spruce offers more.
“We never really invested to build an incredible, modern, mobile app, with features like cash back rewards that make it really different,” Jones said. “Spruce is a fully featured mobile banking platform, while our Emerald Card is really just for people who want to load their refund and then spend down the balance each year.”
