How banks can use customer financial data to help people avoid money problems

One of the hardest parts of my job at Money and Mental Health is hearing about situations when someone was struggling with financial difficulties or a mental health problem and didn’t get the help that they needed. It is enormously frustrating to hear about cases where people have experienced serious psychological distress or found themselves deep in debt, knowing that a referral to a debt advice charity, or simple reminder that a bill needed paying, could have saved someone from despair. 

However, getting the right information to people at the right time is difficult, particularly as people experiencing mental health problems might find it harder to ask for help, perhaps because of anxiety, stigma, or simply struggling to use the telephone. So today we are launching a new report, Data Protecting, exploring how banks and building societies could use the financial data they hold to identify times when customers might need extra support, and join the dots so people get the help they need, when they need it.

In our new research, we find that many people are keen for their bank or building society to help spot financial problems as they develop, offer proactive support when things go wrong, and help with day to day financial management. Members of our Research Community were particularly enthusiastic about the idea – unsurprisingly, as many have experienced the anxiety and isolation of trying to tackle money worries alone. 

Yet there are also important risks that must be managed if we plan to use financial data in this way. Three big sources of concern include: 

1. 1. Privacy – half of people (52%) are worried about the privacy implications of their financial data being used in this way, including whether it would be shared with other organisations like the government or insurers
   2. Practicalities – Nearly half of people (44%) worried that their bank or building society would treat them differently if they analysed their financial data to identify potential problems. People were particularly concerned that their access to credit or insurance might be affected.
   3. Emotional impacts – People experiencing mental health problems feared that receiving a message about a problem could make them anxious or ashamed.

Customers are not the only ones with concerns about this type of data analysis – banks and building societies also expressed worries about how it might work. Financial services providers are particularly concerned about whether they can effectively identify possible problems in data, as they often only have a fragmented view of customers’ finances. They also have concerns about how data protection rules would apply in this context, and what steps they should take if they identify potential problems. 

For both customers and financial services providers, these risks must be balanced against the existing risk of missing the opportunity to help.

In today’s report we offer a set of best practice recommendations for banks and building societies considering analysing customers’ financial data to identify potential problems and offer support. These principles draw on the ideas of members of our Research Community and financial services firms who took part in workshops we held jointly with the regulator, the Financial Conduct Authority, earlier this year. 

As with all questions about technology and our personal data, debate is likely to move quickly, but we hope these principles will provide a starting point for further exploration, which both protects people’s interests and allows banks and building societies to experiment with new ways they might be able to help customers. 

Over the coming months, we look forward to continuing the conversation, encouraging regulators to offer greater clarity to firms about how they should carry out this type of analysis, and making sure firms do everything they can to support customers who might be struggling. Hopefully, by tackling the tricky questions about the tech, we’ll make it easier for people to get the help they need when things start to go wrong financially, and improve lives.