Next generation of checking accounts to be driven by consumer-permissioned data
Bloom Credit, in collaboration with consulting firm Cornerstone Advisors, announced a commissioned study of consumer finance and credit builder products. Credit Score Management: The $110 Billion Deposit and Payments Magnet finds that the number one feature Millennial and GenZ bank customers want from their checking accounts is a built-in ability to report consumer-permissioned data (CPD) in the form of regular bill payment histories to build their credit profiles.
“People want a new way of establishing their creditwort hiness that doesn’t require taking on debt,”Christian Widhalm, CEO, Bloom Credit.
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Amid high interest rates and increasing inflation, affordable credit remains out of reach for tens of millions of Americans. More than 100 million U.S. consumers are unable to secure credit at mainstream rates either because they are credit invisible, unscoreable by conventional credit scores, or have a subprime or below credit score according to Oliver Wyman. Young people, immigrants and minorities are disproportionately affected in both cases.
Against this backdrop, the report’s survey of Americans with a subprime (580 to 619), near-prime (620 to 670) or no credit score conducted in Q2 this year, reveals:
- Gen Zers and Millennials rank the ability to build credit with regular bill payments the most desired feature, followed by automated health expense reimbursements, rewards for investing, and a paid bundle of subscription services
- 70% said if the financial institution that turned them down for a loan or credit card had offered a free service to help them build their credit, they would have used it
- 46% of Gen Zers and 48% of millennials currently use credit building tools
- 46% of Gen Zers and 57% of millennials have been denied a loan since the pandemic
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“The results of this data are clear. People want a new way of establishing their creditworthiness that doesn’t require taking on debt. They want credit for positive financial behavior they’re already demonstrating and if it’s from their checking account, even better,” said Christian Widhalm, CEO, Bloom Credit.
Based on data from the report, Cornerstone Advisors recommends that financial institutions provide a built-in ability for consumers to report their bill payment histories directly into checking accounts rather than treating credit building as a casual add-on.
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“There is a perception that checking accounts are dying. This study shows that especially GenZ and Millennial consumers want a checking account that is doing more for them. As financial institutions allow customers to report bill payment history from their checking accounts, they can recover lost deposits while also empowering consumers,” said Ron Shevlin, Chief Research Officer, Cornerstone Advisors.
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Source : businesswire