Customer Vulnerability

Does technology safeguard or exploit vulnerable customers?

8 min read

We’ve become increasingly dependent on technologies such as mobile phones, computers, and game consoles to get through our day-to-day lives and for many, living without these would be unmanageable. On average, adults spent 6 hours and 25 minutes on phones, watching TV and using computers/laptops in a day, resulting in 45 hours (about 2 days) of screen time each week. And, amazingly, in India, people have greater access to mobile phones than they do toilets! This digital surge has only increased in the past year due to the pandemic.   

Technology comes with many benefits, such as making interactions quicker and easier, as well as increased access to entertainment. But it also comes with the potential to leave vulnerable consumers in the dark. The latest guidance from the FCA on the fair treatment of vulnerable customers highlights the need for firms to understand their customer base and to put in place resources that will support the delivery of good customer service.  

In this post, we give you some insight to these challenges and how FS firms are using technology to positively impact everyone in society.   


Challenger banks at the forefront of technology  

A pool of challenger banks is disrupting the finance space offering some pretty innovative features to their customers. For example, Revolt, a financial technology company, offers easy money transfers to over 25 countries, and makes it more convenient to split and settle multiple expenses between friends and family. Their tech has made it easier for customers to see where they’re spending their money, enabling them to keep a better track of their budget. Introducing tools such as these are incredibly beneficial as it gives individuals more power to better manage their finances and makes accessing money easier.   


Accessibility for vulnerable customers 

As we see the popularity of challenger banks increasing, it’s worth noting that they’re heavily targeted towards a certain group of people: millennials. This group can adapt to recent technologies more easily and have been shaped by the “technology revolution” as they saw computers, smartphones and the web become essential to work and life. We see how they have embraced technology, are more “tech-savvy” and also more interested in streamlining their finances.  

Over the years, life has increasingly moved online, and having easier access to your money makes challengers banks a more attractive option. Though these banks are becoming more popular, vulnerable groups like the elderly who grew up in an analog era, are struggling with the digital divide. Some are uncomfortable using apps and navigating the internet has left them struggling to stay in touch with friends and family. Ageing better reported that almost half of those who are aged 75 or over have never used the internet. Older people are accessing digital technology later in life and banks need to provide tools to make it easier for them to adjust. 

The digital bank, Starling has launched a “connect card” specifically for vulnerable customers. It can be given to a trusted person so that they’re able to spend on the customer’s behalf. This initiative is incredibly beneficial right now as people may have had to self-isolate due to COVID. This will make it easier for vulnerable people to help manage their finances and give them the tools they need to conduct their day-to-day tasks. It also gives them the ability to ease themselves into using technology to manage their money as it’s often overwhelming at the start. By allowing family/friends to help them along their digital journey, it helps gain trust and makes vulnerable people more open to using technology to help them with their finances.   


The COVID-19 pandemic   

The pandemic has shown the power of digital technology. Because of this we have been able to work remotely, conduct meetings online, keep ourselves entertained as well as stay connected with our communities. Technology has allowed us to stay safe and keep ourselves protected from the virus.   

This has meant that people have had the ability to continue with their lives in some form or the other, however, those living with a disability or those with long-term health conditions have not been able to do so as easily. Vulnerable people are more likely to have lower incomes but higher costs than the general population which makes them susceptible to being disadvantaged financially as well as technologically. They’re more likely to have struggled with the change in life the past year, leaving them behind which adds to the struggles they already face.  

Last year, TSB launched a Smart Agent Function on their website to support vulnerable groups pandemic. TSB employees have specifically been trained to provide customers with the ability to ‘chat’ live online. This gives customers easy access to someone to talk to about their financial difficulties and saves time as enquiries are dealt with quicker and more efficiently.   

Also, by using online chat, banks can use conversations with customers to flag vulnerabilities sooner. Banks are working with speech analytics firms like Aveni to help identify at-risk customers from the very start. We use this technology to rapidly assess considerable risk interactions, highlighting the exact point in the call you need to look at, to help you understand why it’s a risk and provide you with the next best action live or post-call. This shows how impactful technology can be to support FS firms to detect vulnerabilities and help those get the support they need.  


Bank branches on the decline  

With the shift of people using online versus high-street services, we see that bank branches are closing rapidly. For example, TSB reported that they are looking to close 164 branches in 2021. Also, due to COVID, many branches have temporarily closed their premises. These changes have meant that many individuals who heavily rely on access to physical branches are suffering. There are still many elderly people who have no or limited access to the internet, as they still place high value on face-to-face interactions when dealing with their finances. This is because they prefer to deal with people, rather than machines. Also, there will always be people who prefer a face-to-face service. Their needs also should be met and considered when implementing new technology.   

There has also been a decline in cash machines. The Guardian reported that there was a 38% decrease in people using cash machines, partially due to the pandemic. The decrease in use of cash machines has been steady in recent years, however, has accelerated due to the pandemic and now people are increasingly avoiding using physical cash as a means of payment because of the fear of touching ‘dirty’ money/machines/PED devices. This can be seen as a positive as it can reduce the spread of viruses, however, it places strain on the infrastructure of cash. For many, paying in cash makes life straightforward for consumers as well as small businesses. They don’t have to worry about internet speed, charges for transactions or interest added. They can keep an eye on what is being spent and where.   

But due to the pandemic, many banks have had no choice but to close, leaving people struggling to access their money. Some methods that have been introduced to help vulnerable individuals have meant that they can still have access to their money irrespective of the challenging circumstances we are currently in. An example of this is the building society Nationwide determined five groups that were deemed as vulnerable due to the pandemic. This includes people who experienced disruption to travel or travel plans. They introduced a one off or short term access to individuals accounts to individuals who were temporarily unable to come into the branch themselves. This allows a third party to help in an emergency or unexpected situation so that they could have easy access to their money. Also, there’s been an increase in the spending limit on contactless cards and a sharp increase in the use of Apple/Google Pay. This has increased the dependency on technology providing people with money and is seen as a more hygienic way of dealing with money.  


Increase of cyber crime   

The pandemic has led to a boost in online buying and subsequently provided increased opportunities for fraudsters. Lockdowns have forced many people to carry out tasks such as their weekly shop and banking online. This shift has pushed many to use e-commerce, giving fraudsters easy access to potentially vulnerable customers. Last year, UK Finance reported that the industry prevented £1.6 billion unauthorized fraud losses, which is equivalent to £6.70 in every £10 of attempted fraud being committed. Bank staff having been working hard throughout the pandemic to protect customers from fraud and are working with the police to catch those responsible. The UK-wide scheme, The Banking Protocol has been set up to assist bank branch staff to alert the local authorities when they suspect a customer is being scammed. This is being extended to reach out to bank transfers being made by customers through the phone and online services.   

As we move to alternative ways of shopping and managing our finances, FS firms must work to prevent exploitation of vulnerable customers. The benefit of technology is that it provides a space to better inform customers of the uses of services and gives them more sources to make better decisions. By using different digital channels, firms can reach more customers and offer a more tailored approach to messaging. For example, creating online videos in sign language or providing digital brochures on your website in multiple languages can give people better access to information. It’s important FS firms reach out to customers across multiple channels including direct mail, email, online banking and even phone to provide different points of access and encourage adoption of digital services.   


Providing digital inclusivity for all  

To make the most of the new digital era we are in and ensure we protect vulnerable customers we must anticipate their needs and learn what works best for them. The guidelines from the FCA are driving improvements in the way in which firms treat vulnerable customers which will bring around a shift in actions and behaviors across the industry. Therefore, we must work together and provide a space where consumers can learn new ways to adapt to new technology as well as provide accessibility if they require additional support from friends or family. This also includes teaching them how to look out for potential fraud and scams they are more likely to fall victim of.   

FS firms must approach innovation differently and implement empathic designs paying attention to the user’s feelings towards a product/service. This will help us to build better technology and to always have the end user in mind.   

By providing the right tone of voice across digital platforms, vulnerable customers will be more accepting of this form of communication and will slowly integrate it into their everyday lives.   

We must ensure we continue to connect with people and support them in their digital journey. It’s important to give people the opportunity to embrace technology but still ensure firms maintain meaningful relationships with their customers. This is when we will see a real change in behaviour and will give everyone the ability and access to technology they deserve.   


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