Fifth Third unveils tax refund advance program

Fifth Third Bancorp is rolling out a program that offers customers early access to their federal tax refunds.

The new consumer perk launches later this month and will provide Fifth Third Momentum Checking account holders the option to receive their federal tax returns up to five days sooner than the Internal Revenue Service normally delivers them, according to Ben Mendelsohn, the bank's director of product management.

Fifth Third doesn't charge a fee for the bank's tax refund anticipation program, which receives instructions related to an individual's refund from the Treasury Department and "floats" the transaction ahead of the scheduled disbursement date, Mendelsohn said.

The new product is part of a broader effort at the Cincinnati bank. It launched its Early Pay program in 2021, offering 48-hour payday advances to customers enrolled in direct deposits. Fifth Third expanded the program to cover early paychecks for gig-economy workers as well as some government and retirement benefits. The bank also provides the MyAdvance program which provides short-term loans backed by a customer's direct-deposit paycheck.

"There is a real need across a large segment of the customer base to accelerate their cash flow," Mendelsohn said. "The more ways that we can provide that to customers, the better we're serving the customers that bank with us."

Commercial banking

Fifth Third sharpens consumer focus following commercial deposit decline

The Cincinnati bank plans to lean into its retail expansion in the southeastern U.S. after its deposits fell by $6 billion from the first quarter.

By Jordan Stutts

July 21

Over the last decade, tax refund anticipation loans fell out of favor among lenders after regulators began scrutinizing whether transaction fees that banks charged tax preparers were being passed on to consumers. But in recent years, a number of fintech companies such as Chime and Varo Bank have developed early-pay alternatives in an effort to expand their market share.

Fifth Third's expansion of consumer banking perks is a reflection of its decision to focus on retail customers while facing a runoff of commercial deposits. Average commercial transaction deposits during the third quarter decreased by 10% compared with the same period last year, while consumer transaction deposits increased 5%.

"The long-term health of an organization depends on the ability to grow and retain a customer base," Mendelsohn said. "If we provide solutions to support cash flow and manage personal finances, customers are more likely to engage and bank with us for a longer period of time."