Tim Loo, Executive Director of Strategy, at Foolproof a Zensar Company
The way consumers and businesses handle their finances is becoming increasingly ‘faceless’. As banks shift away from pooling their resources into physical bank branches, the tranche of digitally enabled services and features continues to grow and evolve. This movement is not new, many people have been managing the transactional elements of banking online for years. But, what about those that haven’t? And, what about moving beyond the transactional?
This digitisation is being driven by both consumer demand and the need for banks to operate sustainably. However, a key question lies in whether some groups of customers are being left behind, especially those defined as vulnerable, which include the elderly, disabled, and digitally and financially illiterate individuals.
It is also important to note that vulnerability is a fluid dynamic, and that any customer can become vulnerable at any time in their life depending on changes to their immediate circumstances.
To help answer the question of whether some customers are being left behind, we recently commissioned research to uncover consumer sentiment towards banking services.
Tellingly, we found that more than two-thirds (67%) of banking customers feel that banks do not satisfactorily serve vulnerable groups, while almost one in four (24%) believe that banks do not care about helping customers navigate their way out of debt.
These findings reflect a sentiment that the service provided by banks does need some personal flourishes, or, crucially, to bake the fluidity of changes to people’s lived experience into its digital product. Banks need to think hard about human connection across all touchpoints. At a minimum, this means exercising a duty of care towards the most vulnerable segments of their customer base, which can be any customer at any time depending on their immediate circumstances.
Identifying vulnerable customers
This starts by being able to identify such customers, which in turn relies on banks keeping fully up to speed with the evolving definition of vulnerability.
The Financial Conduct Authority (FCA), which recently launched its Consumer Duty regulations designed to better protect consumers by ensuring firms place them at the heart of their product and service strategies, states that 46% of UK adults show one or more characteristics of vulnerability. As the research was carried out in 2020, this figure could be even higher today given the economic hardship that has been endured over the past few years.
The FCA defines a vulnerable customer as “someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care”.
There are four key drivers, including health, capability (financial literacy and confidence), resilience (the ability to cope with unexpected financial situations), and life events such as bereavement, which lead to added financial burdens.
Providing accessible support
In today’s volatile environment, it’s crucial that banks provide help and support to customers.
Many may be at risk of slipping into the vulnerable category as their relationship with financial products and services – especially mortgages, loans and other credit products – high interest rates and pressures from inflation, reduces disposable income.
In response, banks need to adopt a “design-for-all” approach and as a minimum integrate and continuously evolve accessible technologies into their service offering, recognising the diverse variables in people’s lives. On the softer side, this might also mean increasing the number of people trained to help those in financial distress and form deeper relationships with professional organisations and charities in this space to blend compliance with care for the customer.
In terms of digital application, moving beyond compliance as a tick box exercise and exploring new avenues is key. Applied in the right way, generative AI can also help solve this problem. If more of the transactional evolution of design can be managed through smart approaches to design and technology production and deployment, more members of design and engineering teams can be freed up to focus on new frontiers of digital and technology for vulnerable customers and their needs. By shifting focus, you can maintain the crucial part of the business without impacting service, while also embodying design for all as a strategic focus to better share the latent market.
It’s clear that simply leaning on automated customer service tools will not be sufficient here – for instance, according to our survey, nearly one in two banking customers (47%) feel that chatbots are not answering their questions. At the same time, nearly half (46%) called for more human interaction when dealing with their bank.
As well as providing more accessible support through digital and human channels, financial institutions must start to break down the stigma of debt – this will help them to be much more proactive in facilitating advice, planning and open dialogue to solve debt-related problems.
Building trust with customers
Customers, especially those who are vulnerable, are seeking someone to trust as they navigate through difficult financial situations.
These situations are not new, and banks have had to look out for vulnerable customers throughout their financial lives. Indeed, as the years have passed, the world of banking has transformed markedly, and largely for the better for most people.
That said, by connecting with and understanding customers, and developing a more human connection, banks can tap into an underserved group and enhance their brand reputation.