Can Travis Kelce help Experian sell its new checking account?

Experian is moving further into the direct-to-consumer space with a digital checking account.

The credit bureau launched its new product, Smart Money, in early October. This checking account embeds Experian Boost, a service the Costa Mesa, California-based company debuted in 2019 that lets users connect their bank accounts to Experian and transmit information about on-time bill payments that could result in a stronger credit profile. To market the service, it signed on football player Travis Kelce to star in commercials promoting Smart Money.

Digital, fee-free checking accounts have become common, especially among neobanks — many of which tout their own credit-building products, including Chime, Current and Varo (which started out as a challenger bank and received a national bank charter in 2020). Moreover, a checking account is an unusual addition for a credit bureau; neither Equifax or TransUnion have one. Experian Boost is still available for consumers to use independent of Smart Money.

Experian declined to specify how Smart Money would generate money.

"Reasonably, we hope to see an increase in member engagement and consumers graduating to other financial opportunities that help them achieve their financial goals," said Jeff Softley, group president of Experian consumer services, via email. "It is a logical next step for us to expand the depth and breadth of our offerings while delivering on our mission to provide financial power to all consumers."

Although the account does not charge monthly fees or carry a minimum balance requirement, users must first sign up for either a free or paid CreditWorks membership, which provides credit score and report monitoring, as well as more sophisticated identity theft protection in the paid version.

"The program is a new tool in our growing suite of solutions to help consumers build credit, and we expect interest from our member base as well as among consumers who are looking to build their credit profile," said Softley.

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Observers wonder what the benefit is for Experian.

"My question is, is this whole initiative really worth it?" said Alex Johnson, author of the Fintech Takes newsletter.

He points out the venture could draw scrutiny from its primary regulator, the Consumer Financial Protection Bureau, whose director Rohit Chopra has heaped criticism on the national reporting agencies in the past. Johnson is also unclear on the potential for revenue.

Smart Money continues the trend of Experian fleshing out its consumer-facing products, including monitoring and identity theft protection, Boost and Experian Go, which helps people establish a credit history.

Johnson wondered if this is Experian's attempt to keep pace with Credit Karma, which also offers credit monitoring, credit building and digital accounts. Both Credit Karma and Experian Smart Money rely on sponsor banks to hold customer deposits; Experian's partner is Community Federal Savings Bank in Woodhaven, New York.

"Credit building is seen as an effective wedge for driving consumer interest in a product," said Johnson, noting that one neobank told him it was the top feature customers requested.

Ted Rossman, a senior industry analyst at Bankrate, speculates there could be revenue opportunities in cross-selling Experian's other consumer services. This addition could also prop up its brand.

"The fact they are able to pull in utility, telecom and rent information through Experian Boost strengthens its overall positioning as a data aggregator," he said.

Experian may have an edge in the method it uses to build credit via Boost. Some neobanks encourage users to set aside a sum of money each month that will be drawn upon to make payments, often automatically, as a form of credit building. That "manufactures repayment data out of nothing," said Johnson. "It's seen by lenders as a way to hack the FICO score to get it to go up, rather than a legitimate improvement in someone's creditworthiness."

He has heard from multiple lenders that they strip these trade lines from their models, but are less inclined to intentionally discount data from utility bills.

People may see Experian as a more trusted, or authoritative, brand for credit building considering its positioning at a bureau. There is also the convenience factor.

"It's more seamless than linking an external bank account," said Rossman. "This could be especially attractive to people who are new to credit or rebuilding from a prior misstep."

Finally, the sheer strength of Experian's marketing power could overshadow competitors.

"They've gotten pretty good over the last few years with direct-to-consumer marketing and advertising," said Johnson. "I imagine they can outspend [other fintech companies] in this space with customer acquisition."

The budding relationship between Taylor Swift and Kelce is, perhaps, the cherry on top. Kelce's jersey ranks among the top five jersey sales in the NFL right now.

"Such is the power of Taylor Swift," said Johnson.