On 16th November, CfRC Director, Damon Gibbons, participated in Auden’s ‘Products for the People’ event in Manchester.
Organised as part of Tech Nation’s Finclusion programme, Damon was part of a panel discussing the challenges and inspiration that 'real' people bring to businesses looking to develop tech solutions to financial exclusion. The panel also included Valentine Mulholland, Senior Policy and Propositions Manager at the Money and PensionsService, and Sophie Jenkins-Anderson, Research Experiments Lead at Auden. It was chaired by Giles Harridge, Auden’s co-founder and Chief Operating Officer.
Damon was asked to respond to two specific questions. Firstly, can financial technology help everyone? Secondly, when things go wrong, how do we make sure that we have the right support in place for people?
In this blog, we expand on our responses provided to these questions at the event. The responses have particular relevance for the apparent dash to digital in the field of debt advice.
Can financial technology help everyone?
There should be no such thing as “one size fits all” in the world of FinTech. Its most powerful potential lies in its ability to help people obtain much more personalised, tailored, services to meet their needs. But to reach that potential any tech solution must start from the same point as its target customers. It is obvious, but perhaps still needs stating, that solutions, and, more broadly, systems, need to be built around the actual capabilities and needs of people.
There are some longstanding problems. During the lockdown we saw a glimpse of the extent of 'digital exclusion' brought about by a lack of access to laptops. There was a huge need for schools to provide these to children in lower-income households so they could maintain access to education whilst their schools were closed. Many people donated old kit in response. But having some kit is just one requirement for digital inclusion. People also need to be able to upgrade it, pay for broadband, and they need the skills and confidence to use digital services.
In 2018, the Money Advice Service, which was the predecessor of the Money and Pensions Service, identified that around one third of people struggling with finances would continue to require face to face services because of these aspects of digital exclusion. That may have changed slightly since, but in a recent call for evidence concerning the impact of the pandemic on debt advice - when face to face services were closed - over 350 debt advisers submitted evidence showing that the outcomes for their clients suffered.
However, it is wrong to think of digital exclusion in a binary fashion: where people are either excluded or included. Digital exclusion is a broad spectrum. People can be excluded or included at different times. For example, as was revealed by news reports during the lockdown, many households have to share their kit. The single, family, laptop is not available to them constantly. They also have varying levels of skills and confidence. Many people are able to undertake routine tasks such as making a shopping order online, but unable to undertake more complex customer journeys, such as those which rely on them providing a concise expression of their, often protracted, problems. According to Ofcom only 1.5 million households in the UK are completely off-line, but 9 million people cannot use the internet without help. And Lloyds Bank research indicates that 11.7 million people do not have 'Essential Digital Skills for Life', whilst 17.2 million do not have 'Essential Digital Skills for Work'.
The complexity of a person's problem - what they are trying to solve on-line - is a factor in the extent to which they are included, and there is a limit to the extent to which tech can meet complex needs. It may provide individual solutions - a loan product, a benefits calculator, etc. - but it has yet to knit these together in a way which, for example, automatically checks the benefit entitlements of all loan applicants, or which routes people to grants when loans are declined.
Understanding people 'in the round' and ensuring they receive the best outcome possible is not something the internet does very well. It is, instead, too often merely a competitive environment for the sale of specific products, in which non-savvy consumers are also at risk of exploitation. It follows that any transition to digital provision for groups who have more complex problems needs to be appropriately paced alongside their digital skills development.
We can provide some concrete examples from our own experience of delivering rent-flex. Our digital platform allows social housing tenants to create personalised payment plans for the year ahead. This is a potentially very positive use of tech. But the customer journey can be problematic.
Firstly, we see a lot of incorrect data entry by users. This can break the journey from the very start. We have seen instances of people mis-spelling their e-mail addresses for example. We know they don’t even get to verify those, and so cannot then proceed any further. We also see verification information such as National Insurance numbers entered incorrectly: a couple of digits may be entered the wrong way around. That can lead to a delay in the customer journey and frustration on the part of the tenant who wants to access the service quickly.
More fundamentally, our service relies on people providing information about their expected financial challenges over the year ahead. For people to provide that information, they have to trust us. The brand proposition needs to be very strong before it is even up and running as an actual service. In our case, we had to establish how to talk to tenants in a voice that they can understand and trust, and we had to clearly explain why the information is required. It is unlikely that a single service can speak to all groups who may have financial problems in the way they would like and trust.
To some extent, rent-flex has an easier time of things than other digital services, because the service we offer is entirely free to the tenant. It can be much more challenging for tech services to create trust when they need to monetise their offer from the end customer.
In the final analysis, a service can only be tailored in line with the information that is received, and if that isn’t right to begin with then the resultant service offer won’t be either. There are challenges here. People may have an idea from the outset as to what they want from a service. Maybe they have a solution already in mind. They can provide the information they think the service provider wants to see. People often say what they think others want to hear. This can lead to partial or even incorrect information entering digital systems, which can then spread. We all know about computer viruses, but bad information entering networked digital services, whilst not causing a malfunction, could lead to very poor outcomes.
There is a problem with partial information in respect of credit scoring and debt advice for example. Whilst information concerning missed payments is very effectively spread through the system by credit reference agencies and can stick around for up to six years, the subsequent advice provided to people, and the learning that then takes place isn't captured at all. If we believe that debt advice and money guidance services change financial behaviour, would it not be fairer to capture those outcomes within the same data driven systems?
Can financial technology help everyone? To summarise the answer, we are only just beginning to identify the extent to which tech is genuinely capable of helping people at the ‘only just included’ end of the spectrum. We should be very cautious about the pace at which we are moving to digital provision for these groups.
When things go wrong. What support is needed?
This is challenging. The problems we have experienced with ID verification for rent-flex mentioned above are a case in point. A lot of those problems can be dealt with by sending the tenant an e-mail and nudging them to correct things. However, some people continue to have problems finding relevant pieces of information, or the e-mail they receive may trigger more questions. At that point, some people e-mail back asking for a phone conversation because they want to talk. Continuing with only digital contact risks alienating them.
It would also be inefficient. We have all had those times when we are sending text messages to friends, and there comes a point when mid-way through typing a very lengthy response, it occurs to us that it would be much quicker if we just made a call instead.
But these are still relatively simple transactional problems we are referring to. In fact, things get much more complex. Just because people initially seek a digital solution doesn’t mean that it is the most appropriate channel through which to provide services to them. They may not know how complex their problems are to resolve at the point of searching for on-line solutions. People may, for example, think a loan is the solution, when actually their situation warrants a grant or other intervention.
When our rent-flexers submit their proposals through the platform they also tell us about their financial challenges for the year ahead. Some clearly need a lot of support, which would be too difficult and inefficient to deal with digitally, or in some cases even over the phone. We hand off those cases to Financial Inclusion Teams within the Housing Association who can arrange phone calls, and if needed, also provide face to face meetings in local offices or at home.
Whilst this process is working well with rent-flex there are obvious problems in any hand over procedure as the digital service provider isn’t in entire control of the delivery of the subsequent services. If it is a digital referral, service standards can be agreed with the receiving partner, but that usually, and rightly, has a cost attached to it. If it is digital signposting, then, just as with other channels, we can expect many people to drop out of the journey.
Ultimately, designing multi-channel referral processes takes time and money, and there must be appropriate funding for all parts of the journey. We have had to move slowly with rent-flex, monitoring each cohort that is onboarded to see how many need further support, before widening the net. There is a real danger that unless this approach is used, digital providers will cream off those who are cheapest to service, and other channels will be expected to provide support to those with more complex needs. They could become swamped and lack the funding to do so effectively. Again, the pace at which services are transitioned to the digital channel needs to be very carefully calibrated to make sure that people are not left behind.