#United States #Scottsdale #Financial Wellness #Cornerstone Advisors #Banking Strategies

Turning Financial Wellness Into Prosperity

Recent research from Cornerstone Advisors emphasizes the importance of a new approach to financial wellness for banks and credit unions. Though many institutions claim that improving consumers' financial health is part of their mission, few are able to demonstrate that their programs yield tangible improvements for their customers. The latest study advocates for a shift from traditional education-focused financial wellness strategies towards a framework that focuses on measurable financial performance. This 'financial lift' concept establishes a direct link between improvements in consumer financial health and institutional revenue.

Understanding the Financial Lift Framework

The report titled "Monetizing the Mission The Financial Lift Opportunity," prepared by Ron Shevlin, Cornerstone Advisors' chief research officer, in partnership with Bloom Credit, introduces the concept of financial lift, which quantifies the dollar value of financial improvements achieved by consumers in six categories: idle cash, debt costs, credit, fees, cash flow, and expenses.

With current statistics revealing a substantial disconnect, the report notes that about 53% of credit union members feel that their primary institution does not influence their financial wellness at all. Furthermore, previous analyses show that traditional financial education programs have little to no impact on changing consumer behaviors related to finances, contributing only 0.1% to such changes.

The report points out that, while nearly all banks and credit unions provide access to credit scores, less than 5% actually offer tools aimed at improving these scores. By redefining their approach to financial wellness, banks and credit unions can create value not only for their consumers but also for themselves.

Key Insights into Financial Performance Measurements

Shevlin insists that financial lift offers a practical method for these institutions to assess consumer improvement and demonstrate their role in fostering such growth. The research encourages measuring the financial benefits delivered to consumers against a group that has not been enrolled in these wellness programs. Linking these positive outcomes to metrics like retained deposits, loan conversions, and overall customer relationships can shift how banking executives view financial health strategies.

Key findings from the report include:

• - Consumers gain significantly when institutions transition from providing mere information to offering products that actively reduce costs, enhance credit, improve cash flow, and better utilize idle money.
• - Financially integrated solutions could open up a new revenue stream for banks and credit unions amounting to over $1.6 billion by offering various management services, such as credit score reporting and bill negotiation.
• - There exists a $110 billion deposit opportunity through credit reporting integration into checking accounts, which could generate $1.5 billion in annual interchange revenue.
• - Attracting customers via credit reporting could result in approximately $1 million in additional annual interchange revenue for every 1,000 new deposit customers gained.

These insights collectively underscore a comprehensive strategy that provides practical solutions for improving financial outcomes. By acting on these recommendations, banking executives could align measurable consumer improvements with their institutional growth objectives.

Conclusion: A Call to Action for Financial Institutions

Christian Widhalm, CEO of Bloom Credit, reinforces the potential of financial institutions to deliver significant value to consumers due to their existing relationships, transaction data, and the trust they foster. This research serves as a pivotal step for banks and credit unions to compete not just on rates and fees but on tangible outcomes that benefit both consumers and institutions alike. By embracing the financial lift framework and adapting their strategies accordingly, banks and credit unions can redefine their roles and realize sustainable growth in the ever-evolving financial landscape.

The report is available for free download at Bloom Credit.

About Cornerstone Advisors:
For over 20 years, Cornerstone Advisors has provided insights, strategies, and data-driven solutions to help banks, credit unions, and fintechs achieve growth through improved technology, operations, and performance.

About Bloom Credit:
Bloom Credit is a financial data infrastructure company that enables organizations to optimize financial data through its API platform and fintech solutions, thereby assisting consumers in building their credit profiles by reporting everyday bills.