There are two sides to every story, and the digitisation of financial services sector is no exception. As reliance on technology increases, we are seeing some demographics gain an improved support network while others are seeing the services they rely on gradually eroding away.
Digital banking is reshaping the way customers run their finances. Challenger banks like Monzo are gaining momentum, their popularity driven by innovative features like automatically categorising a customer’s spend. Users can see a total picture of how and when they’re spending their money, what they’re buying and whether they’re keeping to budget.
Tools like this are giving people the power to handle their finances with more oversight and making money management more accessible. But the use, and therefore the benefits, of these digital options are often limited to certain demographics. In the case of Monzo their user base is dominated by digitally savvy ‘millennials’ and under 35s.
Out with the old
But elsewhere there is fallout from this digital revolution. Brick and mortar bank branches are closing at a rapid rate. Which? recently calculated that in the three years between 2015 and 2018, nearly 2900 branches had been closed in the UK alone.
The UK is at the forefront of this change, but it’s an international trend. The underlying drivers are common across other sectors, not just banking. More services are available online or over the phone, fewer people are walking into banks when there are more convenient options, and from a business perspective, there are far cheaper ways to provide a high level of customer service.
This shift in the market makes sense, and it works for many customers. But certain demographics are in greater need of the services provided by a physical branch of their bank. Customers without internet access are instantly disadvantaged when stores and bank branches close. Elderly customers are disproportionately impacted compared to other age groups, as are those with certain disabilities and accessibility needs. In rural areas – often the first to experience closures – the issues are compounded by other factors that isolate these communities.
A question of balance
The FCA definition of vulnerability is deliberately broad. It’s designed to cover, among other things, different disabilities, education levels and effects caused by major life events. As banking becomes increasingly digitised, banks and financial services organisations need be more mindful than ever of those at risk of getting left behind.
Speaking at Bloomberg, FCA Chief Executive Andrew Bailey highlighted this in light of industry rules and duty of care:
“There are two important and at times competing principles at work here: physical access to key banking services, and innovation which improves the overall provision and quality of services. The question is how to strike a sensible balance.”
No one left behind
Technology is ultimately facilitating this move away from physical access, but crucially it’s also technology and RegTech innovations that are finding solutions to the challenges this creates. There are a growing number of platforms designed to improve customer care. In the case of Recordsure, our focus is on tools that identify the customers most likely to be considered vulnerable, allowing firms to intelligently target support to those most in need.
Advancements in AI are empowering banks and regulated firms to gain an understanding of the needs of their customers in a way the world has never seen before. This completely transforms the way they are able to deliver customer care. With the digitisation of services only growing in momentum, there is an irony that whilst technology risks increasing the number of vulnerable customers, it also provides the means to halt this alienation and support those most in need of care.