In May 2022, the FCA announced that 47% of UK adults showed one or more characteristics of vulnerability. This is up from 46% in February 2020, which equates to an increase of 0.9 million adults from 24.0 million to 24.9 million over that period.
For retail banks and insurers, this has led to the question of how financial services institutions can best support vulnerable customers. Anyone can find themselves in vulnerable circumstances, such as losing a job or developing an illness. Consequently, people’s financial circumstances often change without warning. Data from Quantum Metric revealed that 67% of people admit to being regularly stressed about finances over the last six months.
Vulnerable customers have additional or different needs. Therefore, institutions like retail banks and insurers should support them by making their website, mobile apps, and other digital products simple and intuitive. It’s important to emphasise that customers who lack familiarity with digital technology and encounter difficulty navigating it may also be deemed vulnerable.
The situation is exacerbated if vulnerable customers receive sub-par support when navigating banking or insurance. As such, financial institutions need to offer a standout user experience, as well as remove some of the red tape from their customer support processes.
Applying UX research and designing solutions that work for everyone
To promote fair treatment of vulnerable customers, retail banks and insurers should integrate this principle into their culture, policies, and operational procedures. This entails equipping their staff with the necessary skills to comprehend the nature and extent of vulnerability, as well as its implications.
This involves taking practical measures like enhancing user experience (UX) to industry-leading standards and ensuring effective messaging. Additionally, improving usability across all touchpoints—whether mobile, desktop, or app is crucial. For example, being able to determine in real-time when a customer is struggling and offer the appropriate support like a chat prompt. This can be invaluable in helping a customer to complete a transaction.
Data-driven journey analytics can also provide insights into customers’ activities and frustrations, helping banks and insurers retrace customers’ journeys and empathise with them. By pinpointing the moment of derailment, it’s possible to identify friction points and usability issues to streamline your digital experience.
Vulnerable customers and debt
Let’s consider debt as an illustration of vulnerability. Let’s take the case where an individual has financial obligations and exhibits low resilience, recent bereavement, chronic illness, or a learning difficulty. Their circumstances or characteristics may render them vulnerable to the challenges posed by debt.
The above factors can contribute to an individual’s struggle in handling debts, while others with similar debt may be able to cope. When a creditor is aware of a customer’s potential vulnerability, they should exercise extra caution. They should ensure fair treatment and prevent any disadvantages resulting from their situation.
While there is no one-size-fits-all solution, banks and insurers have various options to support vulnerable customers in managing their debts, ranging from enhancing user experience (UX) to providing practical advice. This includes harnessing the power of open banking and APIs to integrate debt advice and mental health resources into websites and apps, building a picture of a customer’s financial health and enabling tailored solutions.
FI’s could integrate a text box at the start of the consumer journey. Then, customers can disclose financial information like debts without the potential embarrassment of in-branch communications. Lastly, banks and insurers could agree to a different way of dealing with a person’s debt that’s more appropriate to their needs, such as amending payment plans.
Creating a vulnerable customer policy
Creating a comprehensive policy to support vulnerable customers is vital. To do this, banks and insurers need to start by understanding the nuances of vulnerability. Personal circumstances are the driver here. All customers are at risk, but that increases for people with vulnerability characteristics. FI’s also need to spot the signs. Because of its fluid nature, vulnerability requires customised and flexible responses from banks and insurers.
Vulnerability can be recurring, and each situation is unique to the specific customer. For example, the same illness can impact two people differently and for varying lengths of time and may or may not leave them feeling vulnerable.
The nature of support provided may differ depending on the financial institution and the unique needs of the vulnerable customers they serve. Nevertheless, banks and insurers play a pivotal role in delivering impactful support to vulnerable customers through a range of strategies. These encompass the development of specialised products and services tailored to their specific needs, fostering clear and transparent communication to ensure information comprehension, providing multiple channels for accessible customer interaction, and training staff to sensitively recognise and respond to signs of vulnerability.