Ending financial exclusion
If you can’t measure it, you can’t manage it
Up to 40% of the population say that they don’t feel in control of their finances, according to a new House of Lords Select Committee on Financial Exclusion. People with mental health problems often face specific difficulties in managing their money and barriers to accessing financial services that would help.
Last week, Money and Mental Health submitted evidence to the Committee, setting out some these barriers, and encouraging the financial services industry and policy makers to work together to make improvements.
What could we do to help people with mental health problems gain greater control of their cash?
Technology offers some exciting ways to help people, whether they have mental health problems or not, to gain control of their finances – for example breaking down your monthly salary into a weekly budget, letting you set aside a few pennies from every debit card transaction in a savings account or helping you find the best deal on household bills. Last Tuesday evening, we spoke at a meet-up of fintech companies doing exciting things along these lines. Given how quickly mobile banking has been adopted, it seems likely that this is only the beginning.
But, to design settings, processes and programmes that could best help people with mental health problems to manage their money, we need data that tells us what the problems are. A wealth of information about our financial behaviour is hidden inside our bank accounts – details about where and when we spend our money, how often we go into our overdrafts, how much we save. Banks, can, and do, use this data to identify sales opportunities and design new products. Yet customers can’t reach it to explore their own behaviour – and developers can’t use it to build tools that might help. By sharing access to this data, rather than just using it to sell us things, we could transform the way we manage our money and pinpoint where problems are likely to emerge, allowing protective action to be taken.
Spotting the patterns
For example, many people with experience of mental health problems have told us that their spending behaviour changes when they are unwell, and they would like support to stay in control. To build the tools that can help people manage this tendency, we need to understand more about it. What does crisis spending look like? What do people buy? How much do they usually spend? Is it one big transaction, or many small ones? All of this information exists, but it’s locked inside our bank records.
And this is just one example among many. We could also use customer transactions records to examine how savings levels and credit card usage change in periods of poor mental health, helping us to spot warning signs. We could explore when people are most likely to fall behind on bills, creating opportunities for extra support, or we could analyse how the Direct Debit system, for example, could work better for people with fluctuating incomes.
The rise of Open Banking
Steps are already being taken to make this data, and all the insights it could offer, available through the introduction of Open Banking. When this is introduced, banks will set up systems which allow customers to securely share their data with whoever they choose, opening up a whole new world of personal money management tools. However, this isn’t expected to come into force until early 2018.
It will take time to design a robust system which will make sharing this data secure and simple. But people with mental health problems are already experiencing the harm caused by overspending or difficulty with financial management. Fintech firms are waiting in the wings to create new products that help, but need access to the data so they can identify solutions. So waiting until 2018 and beyond feels like a lost opportunity. What can we do while we’re waiting for Open Banking to arrive?
A revolutionary new data project
We propose a revolutionary new, government-led, data project, collecting anonymised historic financial transactions data from 50,000 volunteers. Two or three years of data from this many people would create a unique global resource, an insight into our daily financial decisions unmatched by any existing survey. The government alone has the ability to open up access to this amazing data in a secure manner before 2018, letting fintech firms develop products based on real data about what is needed, so that when Open Banking finally arrives, the tools that could help customers gain greater control over their finances are ready to go. It’s an ambitious proposal, but also an enormous opportunity to make a real difference to financial exclusion across the UK.