Bank of Israel's credit data system: Someone who has only one current account is a captive customer

A study conducted in the Bank of Israel's credit data system found that someone who has only one current account is in fact a captive customer of the bank, and therefore on average will pay higher interest than someone who has several accounts in different banks.
Cities aged 18–29 that have one current account pay on average 0.88% more than their counterparts who have multiple accounts. The lowest gap (0.49%) is between the ages of 45 and 65. Customers belonging to localities with a medium socio-economic rating pay a high interest rate of 0.6% compared to those with multiple accounts, while in localities with a high socio-economic rating, the excess interest rate is 0.4%.
The reason for this gap is the alternatives. The bank where the current account is maintained has the ability to make an accurate offer that matches the borrower's level of risk due to the information he has about it. If the customer has several such options, he can price between the offers. Too alternatives so he is defined as a captive customer, and ends up paying a higher price on the loan.
A credit database is supposed to solve this situation. The database, which is managed by the Bank of Israel, draws data from their banks and other credit institutions on their customers: the volume of loans, credit facilities, information on arrears and liens from the past three years. There are currently 38 entities that transfer data to the database. The purpose of the database is to remove the information barrier that gives an advantage to the bank that manages the current account of the customer. The assumption is that when the lenders have the information, they will be able to offer customers attractive loan offers.
The database began operating two years ago, and today the annual report of the credit data system managed by Eyal Hadad was published. In addition to data related to the database, the Bank of Israel tried to examine whether it did contribute to increasing competition in consumer credit.
The study examined the issue of excess interest paid by captive customers with a single account, and found that since the establishment of the credit database, there has been a certain decrease in excess interest. For example, the excess interest rate paid between the ages of 18 and 29 has decreased by an average of 0.4%. At the age of 45-65, it decreased by 0.1%, but the Bank of Israel notes that the statistical significance of this decline was most pronounced in this group.