Improving financial wellbeing through fairer customer outcomes

24 February 2017

By Mark Gossington

The impact of poor financial wellbeing on mental health is an issue not just for the individuals affected and healthcare professionals, but also for the financial services industry. As my colleague, Nick Bouch, mentioned in a recent article, 25% of us will suffer from mental health issues at some point in our lives.

The connection between mental health and financial wellbeing affects people in two key ways. Those with existing mental issues may be at risk of making bad financial decisions during episodes of poor mental health. On the other hand, poor financial wellbeing can have a detrimental effect on mental health, increasing stress, anxiety and depression, and consequently making it harder for people to manage their finances.

In both examples, it can be a slippery slope where money worries exasperate mental health issues resulting in further poor financial decision making. I believe that the financial services industry’s commitment to better and fairer customer outcomes has to take into account this damaging link between money and mental health.

Trust, good conduct and mental health

So where do financial services firms fit into this picture? Delivering better and fairer outcomes for customers must beat the heart of any strategy for mental health and financial wellbeing. By focusing on what’s right for the customer, firms can do a lot to ensure that people receive the right advice and the right products, and do not add further to their financial and mental health problems.

A big challenge is identifying vulnerable individuals. Mental health issues often fluctuate, people have good days and bad days, and credit checks cannot predicate that an individual will ‘crisis spend’ unless it has happened before.

The stigma of mental health issues is also a considerable barrier as many people who suffer do so in silence, or at least are careful about who they tell. Customers will need significant reassurance that they will not be unfairly treated if they are asked for any information about their mental health.

Online credit applications is a key area for concern. Whereas a face-to-face application process might flag up concerns about a customer’s mental health at a given time, the faceless nature of digital financial services means that these human checks are not in place.

In a recent report, Money and Mental Health revealed that 58% of respondents that took out a loan during a period of poor mental health would not have done so if they were in good health. 38% of this group said they couldn’t remember the details of the loan, and 48% said they didn’t have the ability to weigh up the pros and cons of the loan at that time.

Simply asking if a customer understands the information given to them is clearly not enough in these situations.

The Answer: Big Data and RegTech

The financial services industry has access to data that could help people affected by mental health problems manage their finances much more effectively. Monitoring spending behaviour is an obvious way of using data to spot irregular activity, just as we do with fraud prevention. Similarly, online credit applications could include additional testing to ensure that customers understand the details of the loan they are applying for. More attention could also be paid to the periods when customers are in good mental health, providing them with frequent clear guidance during this time.

RegTech solutions have the potential to provide a more customer-centric experience that uses big data, predictive modelling, credit scoring and risk analysis to put the customer and their requirements at the heart of any borrowing decision.

There are also opportunities to build trust and provide customers with outstanding care by looking for solutions that give customers the tools to manage their mental health and financial wellbeing.

For example, allowing customers to set their own controls such as self-excluding from credit, setting spending limits, the notification of third parties if particular behaviours are detected, or even the use of wearable tech that monitors their mental health. These measures can all improve financial management and establish better relationships between customers and the financial services sector.

Additionally with more data and transparency about how mental health issues affect financial management, firms will be able to refine their products to meet their customers’ needs and deliver better outcomes all round.

Mark Gossington | Partner
Profile | Follow @markgossin

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