Since last November, Wells Fargo’s mobile-first banking brand Greenhouse has served as its observation post to study millennial customer behavior.

The results of that study have at times surprised bank executives as they released prototypes of the app to select customers to gather feedback.

“In the extensive research we undertook, we were impressed and humbled by the various life hacks that many people created on their own to help them manage money,” said Peggy Mangot, senior vice president of innovation at Wells, and head of Greenhouse development. “They used notes apps and calendar reminders for key bills. Some of them used prepaid cards and multiple bank accounts to separate money from spending. When we showed the experience to these customers, they had an immediate, positive response to seeing everything all in one place.”

Greenhouse, which allows a user to open an account without needing to go to a branch, is part of a wider effort by large banks to emulate apps popular with millennials, such as Acorns and Robinhood.

Generational preferences for mobile-only banking

It's an effort that mixes personal finance management and positive reinforcement, ingredients that may help banks overcome the wall they run into when it comes to mobile banking, said Emmett Higdon, director of mobile for Javelin Strategy & Research.

Most banking apps have the same features and functionality, Higdon said, and banks have struggled to differentiate themselves from their competitors.

“There’s a big push towards predictive banking right now,” Higdon said. “It helps you establish good money management as a habit. It’s almost Pavlovian in a way.”

Combining artificial intelligence technology, in-house software and third-party applications, Greenhouse analyzes customer behavior and offers predictive insights to help customers manage their money, according to Wells.

Customers can put payments for recurring bills in a separate "envelope" within the Greenhouse mobile app. They can create as many envelopes as they need to manage whatever bills they have. Additionally, the app won’t charge overdraft fees.

Greenhouse’s money management tools were “built from the ground up” based on customer feedback, Mangot said. "Many tools manage money with a rearview-mirror approach," she said, adding that customers wanted to be more proactive in how and where they spent money. "The envelope technology and bill identification resonated with people. As a result, we spent more time on these features.”

The bank is piloting the app among select team members until the summer. In the fall, Wells Fargo will roll out Greenhouse to several states with the goal of eventually making it available to customers nationwide.

The longer a customer is with Greenhouse, the better the mobile app’s predictive money management becomes. Relying on data around customer spending, customer peers and best practices, Greenhouse refines its advice.

“We'll give [users] alerts and insight over time about things we see,” said Steve Ellis, head of Wells Fargo’s Innovation Group, who will retire in September.

“We can tell you when you're doing really well or maybe you want to think about a savings account or maybe there's some challenges coming up and we see a couple things so maybe you want to shift your discretionary spending.”

The app congratulates users when they reach their financial goals and demonstrate better money-managing decisions.

“Say I'm comfortable spending $100 a week on discretionary things,” Ellis said. “With a separate account tied to a debit card, you can't actually spend more than $100. So you create a budget for your discretionary spending. You set that or we give you some ideas of what might work for you.”

After downloading the app, customers are asked for information required to set up a bank account: Access to the mobile carrier, photo of driver’s license, and other identifying information.

“The key thing here is getting people to use it right away,” Ellis said.

Once an account is set up, the customer can move money instantly into the account and set up a virtual debit card.

With the same authentication and identity platform, Greenhouse customers can easily move over to the bank’s regular mobile app or banking site.

While Greenhouse customers can use a branch like any other Wells Fargo customer, branch tellers are not experts in the mobile application. But banking support will be available over the phone at any time. “We’re hoping that we’ve got a good dialogue, and it’s a simple integration,” Ellis said.

For Ellis, Greenhouse is one of the most exciting developments to come out of Wells Fargo’s Innovation Group. The unit, a group of 130 employees, is a bankwide organization focused on revamping how Wells Fargo delivers financial services to customers. The catalyst group is focused on three overarching goals at Wells Fargo: research and development, business consulting and execution.

Greenhouse is a prime example of this goal, Ellis said.

“We have billions of interactions a year with customers; we've got to make sure we get the foundation right,” he said. “We are creating an experience that is new and novel and based on customer behavior and based on how people do things rather than what people do.”

Corrected May 23, 2018 at 10:52AM: In an earlier version of this story, Emmett Higdon's last name was misspelled.