In a report released yesterday, 26 June 2019, the Money and Pensions Service (MaPS) is calling on the retail banking sector to consider that:
- Improving customers’ financial capability should be a strategic goal; providers should consider this as part of building the business case for new products, services and features.
- Financial capability should be integral to the design of products and services, as well as evaluation.
- The sector should work together to drive a cultural shift around money in society.
From savings goal-setting pots to spending analysis tools and features to find better energy deals, the retail banking sector has made significant inroads to help customers improve their financial wellbeing, but more must be done to achieve significant change in the nation’s ability to manage their money, says the Money and Pensions Service.
Low financial capability is contributing to tens of millions of people in the UK lacking the resilience needed to deal with unexpected events such as job loss or the death of a family member. Problem debt can have a profound effect on a person’s mental health and wellbeing. The Money and Pensions Service (MaPS) is trying to address these challenges through working in partnership with the retail banking sector.
At an event yesterday (26 June 2019) to discuss their new report for the retail banking sector, Transforming customer wellbeing – What can retail banking do to build financial capability?, MaPS called on banks to put customers’ financial wellbeing at the centre of their corporate purpose and to ensure their products and services include features to help people improve their ability to manage their money well.
Based on interviews with employees across 19 banks, building societies, fintechs and one credit union, the report demonstrates that while the sector has made progress with good-practice features built into current and savings accounts, there is room for improvement and greater take-up across the sector.
Case study examples within the report include:
- The ‘pots’ saving feature in the Monzo banking app, where customers can set money aside for bills or a particular savings goal, where pots can be named with each goal and target amount. Customers can also set rules to automatically move money in and out of the pots.
- Metro’s Insights app is an AI-powered money management tool enabling customers to keep track of the amount they spend by category, such as ‘transport’, ‘shopping’, ‘eating out’. This analysis may prompt customers to think if these habits are best use of their money and to consider adjusting spending.
- The Plum mobile app includes a feature that lets customers know when they could save money on their energy bill, amongst other expenses, by monitoring what customers pay each month and cross-checking this with tariffs for UK suppliers.
Sir Hector Sants, Chair of the Money and Pensions Service said:
“Money is a fundamental part of life and is central to people’s health and wellbeing. A population that can manage their money and pensions well is essential, and the retail banking sector has a critical and central role to play in moving the dials for the UK population. It is time for the sector to take a much more proactive, holistic approach to financial wellbeing, shifting the balance from the cost of remediation to investment in prevention.
“We encourage the sector to work with us to develop and implement the changes needed to improve people’s financial capability, as well as rebuilt trust and confidence in financial services.”
MaPS has recently held a UK-wide programme of listening events, calling on organisations to discuss views on everything from pocket money to pensions, and help create a new National Strategy for money and pensions, as well as the organisation’s three-year corporate plan. The new report offers another touchpoint for the retail banking sector to engage with the MaPS and feed into the organisation’s development of the National Strategy, to be released later this year.
View the full report, Transforming customer wellbeing—what can retail banking do to build financial capabilityOpens in a new window (PDF, 14MB).