Brief:

• Wells Fargo, the third-biggest U.S. bank with assets of $1.95 trillion, launched Greenhouse as a digital-only bank to reach mobile customers and to provide more personal finance tools within a smartphone application. The Greenhouse app will start as a pilot program in early 2018 with a planned rollout for iPhone users later in the year, according to a press release. 

• Greenhouse is focused on acquiring and keeping new customers through a simplified interface and features to help them save and to pay bills with dedicated “envelopes” for categories such as rent, utilities, auto loans and other recurring charges. The brand offers an account tied to a debit card and a dedicated service team to provide helpdesk support.

• Steve Ellis, Wells Fargo’s head of innovation, said 80% of a bank’s interactions are digital and the use of services changes over time. By helping people to manage their money, the bank hopes to build a relationship in other areas such as investing, he told Tearsheet.

Insight:

Starting Greenhouse is one way for Wells Fargo to reach consumers with a new brand as the financial institution has one of the worst reputations in banking with repeated scandals for creating millions of phantom accounts without the permission of its customers, enrolling others in automatic bill pay without authorization and forcing up to 570,000 borrowers into buying unneeded auto insurance. 

As consumers becoming increasingly comfortable with banking from their smartphones, Wells Fargo is among the traditional banks that are offering mobile banking along with personal finance features to help people manage money. Others include JPMorgan Chase, TD, RBC and Citi. But these banks face growing competition from digital upstarts like Moven and Simple that focus on the mobile experience. A 2016 report from Javelin Strategy & Research found mobile-first account holders tend to be younger, represent a large percentage of deposits and more likely to change their primary bank. 

Developing a mobile brand is an important way to reach millennial consumers who are more comfortable with online banking. The generation of people born from 1980 and 2000 tend to be better savers than other generations likes baby boomers and Generation X. About 60% of 18-to-36-year-olds have cut spending in order to save more money, according to Bankrate.com. Millennials were more than twice as likely as older generations to set a spending cap in order to save more. That’s an encouraging trend, especially since another Bankrate study found that only 4 in 10 Americans could cover an unexpected expense of $500, putting them one paycheck away from a cash crunch.