UK Finance report on financial inclusion in a digital age

• United Kingdom

• Financial services
• Financial services - Digital Financial Services

02-01-2019

Summary

In our briefing ‘Consumer Vulnerability and the Equality Act 2010: key issues for digital financial services' we considered the risks to providers of digital financial services that arise from UK regulatory expectations around the treatment of vulnerable customers and duties under the UK's Equality Act 2010. Closely related to these issues is the concept of digital exclusion, i.e. the possibility of customers being excluded from being able to access services and products because of the shift to digital platforms.

UK Finance[1] have published a report entitled ‘Financial Inclusion in a Digital Age’ which recognises the challenges arising from digitisation but also outlines the ‘significant opportunities for the industry to leverage inclusive design principles, to achieve better access, inclusion and support for existing and potential customers, including vulnerable customers.’

The report emphasises that cross-industry collaboration, potential government intervention and initiatives such as the Financial Services Vulnerability Taskforce is key to achieving this outcome so that no sector of society is left behind and ‘every adult in the United Kingdom is connected to the financial ‘mains’ just as he or she is connected to mains electricity…’

Report conclusions

The report highlights the significant challenge in bringing together all the required stakeholders to achieve a ‘joined-up cross-disciplinary response’. It also concludes that further work is required on the regulatory framework to promote inclusion (prioritising digital focus during future rounds of the FCA Sandbox initiative was mentioned) which could involve customer or wider public subsidy and it emphasises that continued upskilling remains a challenge.

To encourage customer disclosure of vulnerabilities to financial providers (which was a key risk identified in our briefing), it makes it clear that work is required to remove any perceived associated social sigma.

The report concludes that to build upon the positive steps already being taken by the financial services sector, one of the key ways to address vulnerability and inclusion issues is co-design with customers of products and services. This entails ‘having a curious approach, proactively considering the needs of different users - particularly vulnerable customers (e.g. those with hearing, sight, language, health or other constraining factors) - through the use of detailed customer journey planning and user testing products/services with all the customer segments and relevant third-party organisations’.

In terms of opportunities, the report concludes that Open Banking could lead to product innovation such as using data analytics to identify vulnerability and using social media as well as further roll out of many existing digital solutions such as video servicing, pre-paid cards and financial management apps.

Finally the report does recognise that there will always be a proportion of the population that will be unable to make full use of digital channels and therefore an ‘omni-channel experience’ and thus promotion of non-digital channels should continue.

About us

We have a long track record of helping firms (1) respond to complaints that they have failed to have due regard to customer vulnerability; and (2) manage claims for breach of the Equality Act. Whether you are designing a new digital product or channel of distribution, preparing to seek investment in your product, looking to acquire a fintech firm, or facing challenge from existing customers about your product, we can help you identify and manage regulatory and legal risks associated with consumer vulnerability and the Equality Act. Please contact us if you would like any further information.

[1] with support from Capco