The news: Happen Bank, formerly LendingClub, is converting borrowers into more engaged customers, according to its Q3 earnings.

• The number of active borrowers with a deposit account tripled YoY, while total deposits grew 22% to $11.5 billion. 
• Former borrowers who use either a deposit account or Happen's financial management tools were two to three times more likely to return for another loan than customers who only had a lending relationship.

Zooming in: Happen is using incentives to keep borrowers engaged beyond their initial loans. 

• Its LevelUp Checking account rewards customers with 2% cash back for making on-time loan payments. 
• And its LevelUp Savings account offers up to a 4.2% APY to encourage keeping more money with the bank.

One in 5 new LevelUp Savings accounts is opened by borrowers who go on to accumulate $18,000 to $20,000 in savings after paying off their loans, CEO Scott Sanborn said on Happen’s earnings call.

Implications for banks: Lending relationships often begin with a specific financial need, such as consolidating credit card debt or financing a major purchase. Once that need is met, banks have fewer opportunities to engage customers who don't use their other financial products.

Happen shows how a loan can serve as an entry point to a broader banking relationship, rather than a standalone transaction.

High-yield savings accounts (HYSA) in particular can grow banks’ customer bases. Happen calls its current base the “motivated middle”—high-income, high-FICO, digitally savvy consumers. But a HYSA can attract more diverse consumers, like Gen Zers who are still building their income and credit histories: 75% of Gen Zers say competitive interest rates are a top factor in where they bank, according to FinanceBuzz.

This content is part of EMARKETER’s subscription Briefings, where we pair daily updates with data and analysis from forecasts and research reports. Our Briefings prepare you to start your day informed, to provide critical insights in an important meeting, and to understand the context of what’s happening in your industry. Non-clients can click here to get a demo of our full platform and coverage.