Introduction
So that an organisation can operate effectively and safely, with a clear conscience, in full compliance with regulations, vulnerable consumers must not be disadvantaged and ideally, they should be supported. This requirement is of increasing importance, especially in financial services where the Financial Conduct Authority is driving the vulnerable customer agenda forward at pace.
However, it is not just the financial services industry that needs to be aware of vulnerable customers, but any organisation that has a significant ongoing critical service, health or financial relationship with a customer. This includes mobile phone companies, insurers, utility companies, gambling companies, media subscription businesses, car finance companies as well as banks and pension providers. It also includes organisations that provide essential pharmacy, health and medical services.
What exactly is a vulnerable customer?
The Financial Conduct Authority definition of a vulnerable consumer is:
Someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care
- Detriment is the negative outcomes suffered by a group of people compared to the average person. This can include:
- Not getting access to the most applicable products or services
- Mis-selling of contracts or services
- Unfair decisions or judgements
- Missing out on the best prices and offers
- Unnecessary distress
- Poor services
Detecting and measuring vulnerability in digital channels
Advances in data capture, big data analytics and artificial intelligence mean it is now possible to start to detect, in a compliant and ethical manner, customers that are potentially vulnerable. Vulnerability can be detected using existing customer journey data, operational data and by reading digital signals taken from app and website interactions. Digital signals, or behavioural data, are the big data trail left behind by a customer as they interact with digital services, it is the detail of every click, swipe and page read.
Behavioural signals can include:
Frequency of engagement
- Branch or call centre interactions
- Website and app interactions
- Changes in frequency of interaction
- Multiplicity of channels per day
Time of day
- Middle of the night/anti-social hours
- Unpredictable patterns of access
Time between access
- Checking every few hours or less
Location information
- Multiple locations per day
- Distant or remote customers
Outdated or slow technology being used as primary access means
- Difficulty in completing a form, for example multiple edits and slow typing
- Repeated failure to complete an online or app transaction
- Life event content read e.g. looking at pages about bereavement or unemployment
- Shaky mouse movement on website or long mouse journeys
- Frequent movement of small amounts of money between pots
- Unusually large transactions
- An unusual level of foreign transactions
- Increased number of claims of fraudulent account activity
Carrying out this measurement is not technically challenging, much of the data already exists within organisations, it just requires a dedicated project to assemble the data and access to a modern data platform. There are ethical and legal dimensions to cover before collecting and using these signals to measure vulnerability, but the GDPR definition of legitimate interest applies and is a legal basis for processing data in this way. Getting the right legal and ethical framework is possible, and the benefits for consumers, compliance and brand make it a worthwhile task.
What to do about customers who are vulnerable?
If a customer is exhibiting signs of vulnerability and is potentially at risk of detriment, organisations should consider if the customer:
- Should not be the target of proactive marketing such as personalised online adverts, outbound calling or direct mail
- Could be proactively offered help, for example budget calculators
- Could have additional safeguards put in place, such as a longer cooling off period
Some of these practices do take place in call centres and physical stores or branches, but not within digital channels because historically organisations have been unaware and unable to respond to individual customer needs.
Action plan
Organisations that sell financial products or have significant ongoing financial or service relationships should proactively consider monitoring customer behaviour in digital channels for signs of vulnerability. It is not yet mandatory, but it is best practice and will be incorporated in regulations as more and more organisations become truly digital first.
The first step is to measure anonymously in order to understand the scale of the issue and develop a strategy based on good data to protect customers from detriment.
Logan Tod & Co are digital data strategists, coaches and practitioners. We work with your organisation to help shape an initial measurement program, plan data capture, support data transformation, build dashboards, discover insights and develop APIs that enable you to protect the vulnerable from unintended detriment. Find out more.