Gen Z financial app provider turns its sights on banks

Greenlight Financial Technology, the company behind a banking app for kids and parents, has received investments from banks such as Wells Fargo and collaborated with JPMorgan Chase for its First Banking product for kids. Now it is formally extending its product to traditional financial institutions.

On Wednesday the company announced Greenlight for Banks, a capability that lets banks and credit unions integrate Greenlight's app and accounts in different ways. Most of its financial institution partners are choosing a light-integration, co-branded app approach where users register for Greenlight through their bank and download the app from Apple and Google's app stores. Greenlight also offers application programming interfaces to help banks create a white-labeled product.

The Seattle-based Washington Federal, or WaFd Bank, is one of Greenlight for Banks' early partners. 

"We've had a 'kids app' on our wish list for several years," said Cathy Cooper, chief consumer banker at the $21.7 billion-asset institution, via email. "We selected Greenlight because it provided us with the right mix of features, value and experience that we feel confident recommending to parents."

Cooper hopes to improve client satisfaction, attract new customers and boost customers' overall financial health in a measurable way.

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There are several aspects that may make Greenlight for Banks attractive to both banks and their end users. Partners can tweak the messaging in their co-branded Greenlight app and cross-sell products, such as other checking accounts or credit cards. Although the direct-to-consumer Greenlight app carries subscription fees of $5 to $15 per month depending on the tier, it will be free to bank customers when they sign up through their bank and fund the account using an existing checking account or debit card from that bank. (The partner will pay Greenlight a flat monthly fee.) 

"Banks want to create multi-relationship customers," said Matt Wolf, senior vice president of business development at Greenlight, in an interview.

Wolf acknowledges that 12-year-olds will not rack up large balances, and says that Greenlight does not encourage high spending among its young users. 

"But traditionally, parents are taking money out of the bank and giving it to their kids in cash," he said. "We've arranged it so the bank can keep deposits and grow that base."

End customers will access a plan called Greenlight Select, which is a version of the company's direct-to-consumer base-level Greenlight Core tier, albeit without a credit card or investment capabilities. Users will get a debit card and app features that include parental controls (for instance, the ability to set limits by spending category or store), the ability to set up chores and automated allowances, and gamified financial literacy. Wolf describes the arrangement as parents owning the account while their children get access to a subledger. 

JPMorgan Chase was Greenlight's first bank customer in 2020, well before Greenlight for Banks existed. Through the solution that Greenlight designed for Chase, "We learned that a lot of banks and credit unions would like to do this but it's not realistic that they would make that level of investment," said Wolf. 

So far, six financial institutions use Greenlight for Banks, including WaFd; Morgan Stanley; High Country Bank in Salida, Colorado; and Community Financial Credit Union in Plymouth, Michigan. 

Cooper of WaFd said the bank has a long history of promoting good financial habits for this demographic, including partnering with content platform Banzai and youth organization Junior Achievement to bring financial education content to schools in its eight states and a savings account program at elementary schools. 

"It worked great until COVID interrupted school attendance and it became clear that we needed to bring technology solutions to these kids and their parents," she said.