Banks as Cupid
David Simmonds

The big banks expect to show weak results due to the slowdown in the Canadian economy. Here’s a growth opportunity for them that arrives at a particularly good time.

Similar credit ratings mean a more lasting marriage or partnership.

First, here’s some background. The US Federal Reserve Board, according to Bloomberg News, published a study showing that credit ratings have a strong correlation with the stability of a romantic relationship. The closer the credit ratings of two individuals, the more likely it is that the couple will stay together. The greater the absolute credit rating, of each of the two partners, the greater the chance of the relationship will last. The language of the study steers well clear of the romantic, however. Try this one: “Among the relationships that survive two years, a one standard deviation increase in the initial average credit score implies a 37 per cent lower chance of separation during the third and fourth years of the relationship.” Yes, that’s what I would have guessed myself, had I not become all dewy-eyed reading it.

There is an interesting nugget in there. The study tends to confirm a simple assumption: couples who share the same attitude to financial responsibility will tend to stay a couple; those that don’t, won’t stay together. A matching sense of financial responsibility is important in a relationship and a credit rating is a simple measure of financial responsibility. That would be helpful to a bank in determining to extend credit to a newly minted couple.

I said this was a growth opportunity, not just an improver of lending decisions. How does that come in? In a word, Ben, it’s “matchmaking.” If I can find out from my bank, I’m a credit match for my partner. If that match is as solid a signal about relationship success as I am going to find. Then why should I bother throwing good money after bad to use a website that puts me in touch with people who like the same music as me, say, bluegrass, and share the same favourite colour, say, yellow. From where I sit, it seems to me that the banks are sitting on a potential goldmine.

I grant you there are a few hurdles to overcome in order to conclude that the idea is practical. Confidentiality is one of them. You can’t expect a banker to be showing me the credit scores of all their other clients, nor would I want mine known to anyone else. Bankers are nothing if not souls of discretion and most often, they are trustworthy.

There are some hurdles.

Who better than a banker, then, to entrust with the task of matching my credit rating with another’s, and letting each party in on the happy results. It would certainly add to the banker’s job satisfaction, and the bank would get two clients for life, assuming the relationship pans out the way the Fed study says it will.

I also grant you that matchmaking services don’t fit the traditional business model of a bank. Why do banks not innovate? A generation ago, who could have imagined banks operating insurance, investment and trust companies?

Bankers could doff their pinstripes in favour of, say, the new Sears Wayne Gretzky Collection look. Banks themselves could adapt their decor to appear less intimidating; “Welcome to RBC: Try Our Waterbeds.” They can also hire Dr. Phil surrogates to train staff in sensitivity to matters of the heart; “At BMO, we don’t count your money because we trust you.”

As with all businesses, the key to success lies in customer service.

The challenge, it seems to me, lies more with the consumer of the service than with the provider. Can customers warm up to an institution that once offered it based on the extra quarter of a percent interest rate on a savings account. Now can it play Cupid instead? Perhaps we’ll see some action in the middle of February.

When you think about it, it’s perhaps mildly surprising that banks have not already intervened in more major life milestone events. Sure, banks have the basic financial transactions like making a will, investing your money, and buying insurance covered, but banks could go further still. Our credit rating matched couple are likely to become parents; why not solidify the relationship with “CIBC Baby Furniture?” Their child is going to skate or play hockey, so why not a “Scotiabank Sporting Goods.” That child is going to want to become a driver, so why not a “TD Auto Repairs” as a route straight to the customer’s loyalty.

It’s one small step for the banks to start playing Cupid. I’ll leave it to you to decide whether it’s a giant step for humankind.