SCOTTSDALE, Ariz. — Banks and credit unions should measure whether their financial wellness programs leave consumers financially better off and connect those results to business growth, according to a new report from Cornerstone Advisors.
The report, “Monetizing the Mission: The Financial Lift Opportunity,” argues that institutions have focused too heavily on financial education and program participation without demonstrating improvements in consumers’ finances.
Written by Cornerstone Chief Research Officer Ron Shevlin and commissioned by Bloom Credit, the report defines “financial lift” as the measurable dollar value of potential or achieved consumer improvements across six categories: idle cash, debt costs, credit, fees, cash flow and expenses.
According to Cornerstone’s release, most banks and credit unions cannot connect financial wellness activities to deposit growth, loan conversions, retention or a larger share of customers’ financial business.
A Gap Between Mission And Results
The report cited several findings:
- 53% of credit union members say their primary financial institution has no impact on their financial wellness.
- An analysis of more than 200 studies published in Management Science found financial education interventions explained just 0.1% of financial behaviors.
- Although 95% of banks and credit unions provide access to credit scores, fewer than 5% offer tools designed to improve them.
“The industry has spent years measuring participation in financial wellness programs instead of measuring whether consumers are actually better off,” Shevlin said in the release.
The report recommends comparing the dollar value of improvements achieved by participating consumers with results for a group that did not enroll. Institutions should then connect those outcomes to deposits retained, interchange revenue, loan conversions and customer relationships preserved.
Potential Revenue Opportunities
The report advocates products and services that reduce costs, build credit, improve cash flow and help consumers earn more on idle funds.
Its estimates include:
- More than $1.6 billion in potential revenue from credit score reporting and management, subscription management, and bill management and negotiation services.
- A $110 billion deposit opportunity and more than $1.5 billion in annual interchange revenue from integrating credit reporting into checking accounts.
- Roughly $1 million in incremental annual interchange revenue for every 1,000 deposit customers attracted through credit reporting, according to the report’s model.
Those figures represent modeled opportunities rather than reported results.
The report also outlines seven steps for executives, including segmenting products, embedding credit-building services, assigning leadership accountability and measuring results at the board level.
“Financial institutions are uniquely positioned to deliver meaningful financial outcomes because they already have the relationships, transaction data and trust required to help consumers take action,” Bloom Credit CEO Christian Widhalm said in the release.
