Consumer protection is central to our Open Banking Standards, and already it is clear that Open Banking has a valuable role to play in helping vulnerable customers manage their financial data. We take a look at some of the initiatives, apps and services that are being developed, with particular focus onto the area of money and mental health.
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Open Banking is working hard to be a force for good in society: making money work for vulnerable customers experiencing mental health issues, and empowering these people to move, manage and make more of their money.
On 23rd July 2019 the FCA published draft guidance for financial services firms’ treatment of vulnerable customers, with the FCA’s definition of vulnerable customers, the scale of the issue, its potential impact, and early thoughts around how it expects firms to treat vulnerable customers.
A quarter of all people experiencing mental health problems are in debt. Last year over 100,000 people in problem debt attempted suicide. 93 per cent of people with mental health problems spend more when they’re unwell. These statistics from the Money and Mental Health Policy Institute should shake us up and get us talking.
This week is Mental Health Awareness Week. Approximately one in four people in the UK experience mental health problems each year, with a combination of depression and anxiety being the most frequently experienced type of health problem. For many people, thinking about money is anxiety-inducing and talking about it is depressing. Money provides security, affirms our identity and our sense of personal power – people’s finances have a direct impact on their emotional well-being. When we’re struggling financially or mentally, it can affect us in more ways than one.
This is why the potential of Open Banking is so potent. Our industry is increasingly in a position to ‘connect the dots’ between people’s financial health and their mental health. Open Banking has a valuable opportunity to be a force for good, driving more sensitive and personalised services which could improve wellbeing and benefit all society.
Transaction data shared via Open Banking provides fertile soil for innovation. A number of firms have already responded to the ‘Stopper Shopper’ trials run by MMHPI, which showed the benefits of giving people the option to block spending on certain sites or at certain times of day. Account aggregation and the insights it enables can provide a new sense of control, which has been difficult to attain before. Tech firms are looking to build account assistants, giving people the option to nominate a friend or carer when their financial circumstances drop below a certain threshold, or seem out of kilter. Open Banking is revitalising the debt sector, affording consumers simpler and less stressful ways to get help. There is yet more potential for mainstream aggregators – fintech firms and banks who have launched solutions that enable users to see all of their bank accounts in one screen – to identify indicators for debt earlier and refer people for help more quickly.
But trust is essential. Work by Barclays, where they surveyed customers on sharing their data to identify vulnerability, shows that where people have good experiences of financial services, they are more willing to trust firms to intervene to help them (based on their data). However, where customers have been impacted, they remain sceptical. It is critical that we have strong controls in place to ensure that consumers and their data are not only ‘protected’ but respected – and that consumers know that the firms they sign up to really are on their side.
This speaks to a different kind of culture – one that’s more people focused. It’s also one that’s not afraid to talk about mental health in the workplace. Learning to have healthy conversations about mental health in the workplace is important for our growing start-ups and economy. It’s great to see Monzo proactively championing mental health in the workplace, as well as industry figures like the Competition and Markets Authority’s Adam Land sharing his own experiences with such honesty.
Facing the reality of our humanity and our mental health stories is sobering, but positive developments like those outlined above also give rise to celebration. Even at the beginning of the Open Banking journey we’re seeing positive efforts to reflect the needs of real (rather than perfect) consumers. As Open Banking grows, I am looking forward to seeing how it changes lives (and not just payments) for the better.
To learn more about what Open Banking is doing in the area of supporting vulnerable customers, visit www.openbanking.org.uk/insight/vulnerable-customers/
OBIE has placed the needs, security and protection of vulnerable consumers, such as those experiencing mental health issues, at the heart of our API Standards and Customer Experience Guidelines. Read this short summary of why that is, as well as an overview of the guidelines provided to Open Banking participants.
Financial difficulties and mental health problems are closely interlinked. People with mental health problems are three and a half times more likely to be in problem debt, while half of all people in problem debt have a mental health problem. Over time this can drive a destructive cycle – each year over 100,000 people in problem debt attempt to take their own life.
Lots of organisations have a role to play in breaking this link, from the government and regulators to the NHS and local authorities. But financial firms can also make a big difference. For a start, they are often the only organisations which know when someone is struggling with their finances, due to the stigma around debt.
Moreover, financial firms are well-positioned to spot when someone’s financial situation may be suffering due to poor mental health or other challenges, thanks to the customer transaction data they possess. These datasets are already analysed by firms for marketing and fraud protection purposes. But use of these datasets — when combined with innovations in open banking and AI — has the potential to transform the capacity of financial firms to both identify and support customers experiencing financial difficulty and mental health problems.
For example, someone experiencing a manic phase of bipolar disorder may be more vulnerable to impulsive spending or losing track of their finances. Others affected by depression might withdraw completely from financial management when unwell, resulting in unpaid bills stacking up. In both these situations, it’s very likely that those patterns of behaviour will become evident in their transactions data.
The question, however, is what firms should do next. Some people will welcome their bank or creditor keeping an eye on their spending patterns, and making contact if they raise concerns. Some others may prefer to access these types of services from independent third parties (FinTechs that are regulated by the FCA and registered with OBIE), rather than their banks. And there will be those for whom the idea of a bank monitoring their data is uncomfortably Big Brotheresque. Given these big ethical questions around privacy, consent and customer appetite, and the technical challenges that using data poses, it’s unsurprising that financial firms have thus far been reluctant to act.
To address these questions, Money and Mental Health is undertaking a ground-breaking programme of work with the Financial Conduct Authority, exploring how financial firms can use transactions data and AI to identify and better support people struggling with financial difficulties – with the aim of offering timely support to people who may struggle to ask for help due to a mental health problem. This will culminate in October with the publication of a research report offering practical recommendations to firms on how to navigate these issues. Our hope is that this will help ensure firms can make the most of the transformative potential of data and AI, while prioritising the customer’s best interests and safety.
From a pool of 50 applicants, Nationwide Building Society have selected seven FinTech companies who will develop Open Banking based apps and services to help financially vulnerable people.
Ahead of Mental Health Awareness Week, we caught up with Bailey Kursar, CEO and Founder of Toucan, and Stuart Bungay co-Founder and CEO at Tully, about helping people experiencing mental health issues through open banking technology. Both Toucan and Tully were recently selected as finalists in the Open Banking for Good challenge, in the ‘Money Management & Help’ category.
Both Stuart and Bailey confirmed that our finances can directly impact on our mental health. According to Bailey, “We’re taught that if you can’t get a handle on your spending, you’re ‘lazy’, ‘reckless’ or ‘stupid’. One of the biggest things we can do to improve people’s lives is to improve their financial literacy.”
Stuart agreed: “Debts and the stress they cause can seriously impact a person’s mental and physical health. One in three people in the UK who seek support have mental issues such as anxiety.”
Tully and Toucan are both using Open Banking technology to support and empower their vulnerable customers, but for quite different reasons.
Tully use Open Banking to reach users on their terms. Stuart explained, “We use Open Banking to allow people to seek help and advice in an environment where they feel comfortable. At Tully, we use Open Banking for a variety of functions, from building an individual’s budget based on actual transaction data, to supporting and coaching individuals to make their money go further each month.”
For Toucan, rate of innovation is more important. According to Bailey, “Legacy banks aren’t moving fast enough to build important new features that we’re focused on delivering – like third party notifications, designed to help those with bipolar disorder and similar conditions get support with their spending from a family member or friend. Open Banking enables apps like Toucan to use the data we need to deliver these new features without relying on legacy banking systems or processes.”
Both Tully and Toucan chose Open Banking to increase the functionality they can offer their end users. For Bailey, “Open Banking gives us the ability to build smart features around a customer’s spending data.”
And Stuart agrees: “Open Banking provides Tully with an accurate real-time view of how much a person can actually afford to repay on their debts. We then use real-time updates to support behaviour change over time, helping our customers achieve short term spending change to save towards longer-term goals.”
Both Stuart and Bailey referenced the real, tangible improvements to how people can manage their money.
Stuart again emphasised availability: “Open Banking allows Tully’s customers to complete their budget and get the advice they need in their own time. Compared to the current industry standard, Open Banking provides a quicker and more accurate way of providing income and expenditure information, without having to guess or search through endless past bills and bank statements.”
And for Bailey, the benefits were even clearer: “Open Banking gives people a secure way to use their spending data in apps that aren’t controlled by their bank. Products like Toucan can then help them spend less, save more and get better deals.”
Much has been achieved to date, and FinTech applications continue to come online to empower vulnerable consumers with better access to a broader and more accessible range of financial products. However, for Bailey, there is still more to be done – and vigilance must be the industry’s watchword going forward.
“I think there are areas where fintech has to take more responsibility for the implications of the innovations we build. The way we spend, save and borrow money has changed so much in the last decade; inevitably there will be people who are left behind, or who start to feel overwhelmed. It’s now up to us to be more thoughtful in the way we build new products. There is a lot more we can do to prevent overspending or debt connected to mental ill health, and also to alleviate anxiety around money management.”