How innovation and evidence in financial services can transform customer wellbeing

 

Fairbanking Foundation founder Antony Elliott, OBE, comments on the latest report from the Money and Pensions Service, exploring how financial services can improve customers’ financial capability and wellbeing.

I’ve spent more than 10 years encouraging financial institutions to do more to improve wellbeing of customers. The new Transforming Customer Wellbeing report highlights that a tipping point has been reached in both expectation of financial institutions to help customers and the ability to deliver that help. We’re delighted that the Money and Pensions Service (MaPS) is adding to the momentum for change.

Innovative products and services that can help build financial capability

Active saving mindset

Current and saving accounts play a key role in some of the most critical areas for enhancing wellbeing. More customers need to save for expected and unexpected expenditure, including goals, like holidays and house deposits. Savings accounts with motivating goal-setting and easy ways of putting money on one side can be transforming.

Financial services needs to learn from other branches of wellbeing, both physical and mental; identifying successful interventions and applying them systematically.

Credit management

Customers need help to ensure they don’t end up borrowing for day-to-day needs, to pay other debts or borrowing at very high interest rates. Current accounts that calculate how much is left until the next payday or enable customers to block temptations such as gambling sites have proved to make a difference.

Opportunity for further innovation and evidence

Unfortunately, the application of these innovations by financial institutions and the hard evidence of effectiveness is patchy at best. The report highlights many good examples from financial institutions and much good intention, but there are still many gaps. Financial services needs to learn from other branches of wellbeing both physical and mental; identifying successful interventions and applying them systematically.

What financial services can do

It’s much easier to point to the problems than identify solutions, but MaPS has set out a range of credible recommendations.  It would definitely be good for financial institutions to consider how the wellbeing and financial capability of customers will be improved as new products and services are delivered. This means going beyond the low thresholds of transparency and clarity to the summit of building savings and reducing the stress of debt.

MaPS may be able to assist the sector in raising public awareness of good practice, improving trust in providers and ensuring better support for households that are struggling.

Not only is there a need to aim at improving financial wellbeing and capability, but to evidence that it has been improved and to share that evidence where possible. The report makes the point that much of this activity is commercially sound and will build customer loyalty, but we should not be naïve in that some obvious improvements will have to fight for implementation with other commercial and regulatory imperatives.

Access support from MaPS

The final recommendations in the report highlight the need for better use of information about customers to help support them. An underlying theme being that institutions will need to do more voluntarily to deal with the financial capability problem in the UK. But it is not just a question of financial institutions doing all the heavy lifting: the report points to the role of MaPS itself.

The organisation has a good understanding of where the problems are and may be able to assist the sector in raising public awareness of good practice, improving trust in providers and ensuring better support for households that are struggling.

Next steps

Download the report and discover more resources and research for financial services on improving financial capability in the UK.

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