Almost one in four Brits (23%) are ‘financially vulnerable’ according to research released by open banking platform Tink. Moreover, the majority (56%) expect their situation to worsen over the next year. Over half (51%) believe banks should provide financial support for customers during the cost-of-living crisis.
one in five (20%) of the ‘financially vulnerable’ report having missed a monthly mortgage or rent payment. A similar amount (22%) has cancelled financial products such as insurance.
Financial institutions face the challenge of meeting enhanced consumer protection standards amid a challenging time for millions of Brits. Tink says its findings demonstrate the opportunity to use open banking to meet these obligations. And it argues there are innovative solutions available to support and protect customers in financial distress.
Clear demand from ‘financially vulnerable’ consumers for more tailored support
Meanwhile, 43% of those identified as ‘financially vulnerable’ say they would like to learn more about managing their finances. More than half (58%) believe banks should make financial services more universally accessible.
What’s more, 45% of the ‘financially vulnerable’ would switch to another bank if it identified better deals or money saving opportunities for their monthly outgoings. A further 37% would make the switch if another bank provided them with the tailored financial support they need during this time.
Open banking key to supporting ‘financially vulnerable’ customers
Tink argues that open banking-powered innovations in data and digital financial services enable institutions to understand their customers better. They can then coach them through difficult economic times, at the same time as meeting regulatory obligations.
Tasha Chouhan, UK & IE Banking Lead at Tink, said: “It is clear there is an appetite for more support from banks amongst those experiencing financial distress. Open banking has a vital role to play here. Data driven financial services gives financial institutions an opportunity to identify struggling customers and provide tailored support and interventions. Not only can this make a meaningful difference to people who are bearing the brunt of the cost-of-living crisis. It also helps financial institutions to meet enhanced regulatory requirements around protection of financially vulnerable customers.”