Banks and Credit Unions Could Gain $110 Billion in Deposits by Helping Consumers Improve Their Credit Scores, New Cornerstone Advisors Research Finds

New research from Cornerstone Advisors, a leading provider of business and technology consulting services for banks, credit unions, and fintech firms, estimates that banks and credit unions could recapture $110 billion in deposits and generate more than $1.5 billion in interchange fees by integrating credit reporting capabilities into their checking and payment accounts.

The report, Credit Score Management: The $110 Billion Deposit and Payments Magnet, commissioned by Bloom Credit, reveals that a credit-building feature could entice consumers with subprime or near-prime credit scores to change bank accounts and alter payment behaviors.

According to the study, 6 in 10 Americans aged 21 to 44 with credit scores of 580 to 670 ranked credit building as the most attractive checking account feature and said that a checking account that reports rent and bill payments to the credit bureaus, thereby helping them improve their credit score, is a “better value” than their current checking or debit card account.

Credit scores largely focus on how consumers handle debt, offering little benefit for consistently making recurring bill payments. "Helping consumers establish and improve their creditworthiness by demonstrating how they handle debt and make payments is an enormous opportunity for banks and credit unions in their markets,” said Ron Shevlin, chief research officer at Cornerstone Advisors and co-author of the report.

The study found that among subprime and near-prime consumers:

• 73% would consider opening a new checking account if it helped them build their credit by reporting rent and utility payments to the credit bureaus
• 79% would use a non-primary checking account more frequently to pay bills and make other purchases if it reported their rent and bill payments to the credit bureaus
• 68% would switch their direct deposit to a non-primary checking account if it reported rent and bill payments to the credit bureaus
• 70% said if the financial institution that turned them down for a loan or credit card had offered them a free service to help them build their credit, they would have used it

“A checking account with integrated credit reporting translates to improved credit product access, affordability, and selection for consumers,” said Christian Widhalm, CEO, Bloom Credit. “These are tools that can spell differentiation for financial institutions and lead to superior financial service relationships.”

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