Open banking and mental health
How the Competition and Markets Authority report could help those with mental health problems
Earlier this week the Competition and Markets Authority (CMA) published it’s final decisions following a two year investigation of the personal current account market. The CMA have set out three main remedies that they believe will help customers to get a better deal in the current account market. We think one is likely to be particularly beneficial to people with mental health problems: the introduction of open banking.
Introducing open banking
Open banking means that banks will have to allow consumers to share their current account data – like details of payments into and out of the account, overdraft use and balance level – with trusted third parties. At first, this might sound worrying – is it safe for us to be sharing information about our bank accounts over the internet? There’s no denying that there are significant hurdles to clear in creating a system that works, but the gains from doing so will make the effort worthwhile.
The ability to share your current account data in real-time opens a range of exciting possibilities, including the potential to create money management tools and apps specifically for people with mental health problems. For starters, we can expect better budgeting platforms, with the ability to tell us what bills we have to pay in the coming weeks, and how much of the money in our accounts we can safely spend. Tools like these to help with day-to-day money management should help those with mental health problems who find daily budgeting difficult.
“In the past I have missed payments, felt overwhelmed and not been able to manage simple day to day finances.”
Budgeting tools could even be combined with mood tracking, helping those people with fluctuating mental health problems who find that increased spending is a sign of an episode of poor mental health by providing an early warning.
The CMA also made a set of recommendations around prompting consumers to check whether they could get a better deal with another current account provider. Only 3% of people change their current account provider each year, even though the longer you have been with your bank the more you’re probably paying through fees and charges on things like overdrafts and foreign exchange transactions. The hope is that by reminding customers that they can switch and could save money by doing so though a text message or smartphone notification, they’ll look around the market. These are particularly important for the 45% of customers who use an overdraft and pay substantially more for their current account as a result.
However prompts will be of limited help to many consumers with mental health problems, who often find messages from their bank distressing.
“When I’m sent a letter about charges on an account or reaching overdraft limits I panic and hide it, and just wait for it to go away.”
The CMA hopes that prompts will help increase consumers’ awareness of overdraft use and help them manage it, but many customers with mental health problems will need greater support to avoid getting into financial difficulties.
“I’ve spent recklessly with no memory of it. I’ve given gifts for no reason with no memory of buying things. I start to feel better then get whacked with overdrafts I don’t know how I got.”
Competition can only get us so far
The CMA’s remedies are designed to boost competition in the current account market. But greater competition can only do so much, there is more to do to support consumers with additional needs. Many consumers with mental health problems express a desire for greater control over their ability to take out credit, which, for example, could include choosing to have payments blocked rather than going into an unarranged overdraft. With the CMA investigation now concluded, we hope regulators and providers will take the opportunity to consider how they can go above and beyond boosting competition to support customers with mental health problems.