Consumers say banks should track personal data to help avoid debt problems

Consumers say banks should track their personal data to help them avoid debt problems according to a new report published by the Money and Mental Health Policy Institute, supported by Barclays. It explores how banks and building societies could monitor customer data to spot signs that people are at risk of falling into debt, such as sudden drops in income, dramatic increases in spending or persistent use of unauthorised overdrafts.

It also sets out ways that financial firms could intervene to offer support in those situations, for example by alerting people via text message if they are spending more than usual, or signposting them to sources of debt advice. The report highlights that this support could be particularly useful for people with mental health problems, who may struggle to manage money due to common symptoms such as memory problems or reduced concentration, and who may also find it more difficult to ask for help.

Furthermore, new national Populus polling published in the report shows that despite some concerns about privacy, there is strong consumer appetite for banks and building societies to monitor their financial data in this way:

• Half of UK adults (50%) say their bank or building society should use their financial data to identify potential financial problems and offer help, while only one in ten (12%) disagree
• Two thirds of people say it would be useful for their bank or building society to spot financial problems as they develop (68%), and to proactively offer support when things go wrong (66%)
• Six in ten (61%) say it would be useful for banks to use their data to help them keep on top of day-to-day money management
• Around half of UK adults say they are worried about how banks monitoring their data in these ways would affect their privacy (52%). However, 51% say that the benefits of financial firms monitoring their data outweigh the risks, compared to just one in ten (11%) who disagree

The research also highlights uncertainty among financial firms about how to monitor customer data to identify and support people at risk, within data protection rules. It also sets out the challenges firms face in gaining a comprehensive picture of a customer’s finances from their data, as people may have numerous accounts which they use for different purposes (for example, using one account for household bills and another for day to day spending).

The report makes recommendations on how banks could use personal financial data to support customers in a safe and ethical way – and how policy makers and regulators can offer greater clarity to financial firms on how to do so without breaking data protection laws:

• To protect privacy, banks and building societies should give customers choice and control over how – and whether – their data is used to identify when they are at risk of falling into debt. This should include allowing customers the option to opt-out of their data being used, and giving them choice over when and how banks should intervene
• Banks should involve customers in building interventions, to ensure that they strike the right balance between being effective and unintrusive
• The Financial Conduct Authority (the regulator for financial services) and the Information Commissioner’s Office (the data protection regulator) should publish joint guidance for firms on how they can use customer data in this way without contravening financial or data regulations

Commenting on the findings of the report, Helen Undy, Chief Executive of the Money and Mental Health Policy Institute, said “Barely a week goes by without a news story about how companies are using our personal data, and the impact that’s having on our privacy and safety. While these concerns are legitimate, focusing solely on the dangers risks overlooking the enormous opportunity data can present – with the potential to even save lives.”

“Around 100,000 people in problem debt attempt suicide each year in England, with many suffering in silence and struggling to ask for help. Something as simple as a bank checking in with a text message if someone’s data shows a sudden drop in income, or signposting them to extra support, could make all the difference.”

“And the good news is that consumers are on board – so long as firms give people control over how their data is used, concerns about privacy do not outweigh the strong appetite for this important work.”

Raymond Pettitt, Head of Retail Segments at Barclays said “We are always looking for new ways to support our customers to make it easier for them to manage their finances, and are pleased to back this study. We already provide customers with money management tools, such as text alerts, that can help them avoid getting into difficulty in the first place. We were also the first high street bank to give customers the ability to “turn off’’ purchases at certain types of retailers, while our Barclays Money Mentors® offer free and impartial help on budgeting and financial topics. We hope this report shines a spotlight on how the industry can further support customers in vulnerable circumstances.”