#4094: Cornerstone Report Reveals How FIs Are Turning Checking Accounts into Credit-Building Engines...

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Cornerstone Advisors’ Chief Research Officer Ron Shevlin and Bloom Credit’s CEO Christian Widhalm joined us on the show to detail findings from their “Bloom/Cornerstone Credit Score Management Report" — showing how innovative financial institutions are turning checking accounts into credit-building engines. The subtitle of this report added that GenZ and Millennials want credit for bills they’re already paying.

Some stats to back up these younger generations' possible actions:

• 73% would open new checking accounts for credit-building features.
• 79% would switch payment methods to boost credit scores.
• 68% would move direct deposits for credit reporting capabilities.

Ron and Christian also highlighted a few key points from this report:

• How checking accounts that report rent and bill payments to credit bureaus could help lower-credit consumers improve their scores
• Why credit building beats rewards and investment features as the most valued checking account service for young consumers Strategies for banks and credit unions to deploy credit management tools into their checking and payments offerings
• Ways to use integrated credit building services to recapture 70% of borrowers previously denied credit
• Methods for exploiting competitive landscape opportunities that credit bureaus and fintechs are missing

A few numbers mentioned in this report:

• How this a $110 billion deposit and payment opportunity (consumer-permissioned data being the next frontier in deposit growth)
• How a financial institution could see $333,000 in incremental annual interchange revenue? (for every 1,000 deposit customers)
• Since 2020, $3.15 trillion has fled traditional banks and credit unions as young consumers choose fintechs for credit building and financial wellness. (traditional FI’s not serving consumers these areas)

Ron and Christian provided six strategic recommendations in the report for successfully deploying credit building tools to drive deposits, engagement, and customer loyalty, as credit building is a deposit and payments magnet:

1. Embed credit building as a core feature, not a sideshow.
2. Eliminate cognitive and practical barriers to participation. 
3. Target the right audience and promote outcomes. 
4. Train staff to be credit coaches. 
5. Mind the metrics and adjust. 
6. Create complementary offerings. 

To wrap up, they shared overall lessons learned from their research in this report, adding that credit unions need to get younger and this info helps.

Lastly, stay tuned for the annual GonzaBanker Awards livecast on December 16, 11:00 a.m. (PST).

​Check it out and let us know your thoughts. And be sure to watch the entire episode below for all the details.