Protecting vulnerable customers with a single customer view in financial services

Being vulnerable can have many meanings. From financial hardships, illness or disabilities – it is a word we often use to try and better understand someone’s situation. And people’s situations can often change. 

Currently, one in four people in the UK are financially vulnerable. With over 50% of adults having no emergency savings, high inflation and the pressures of a cost of living crisis can put a strain on many individual’s day-to-day lives. 

Traditional financial institutions are growing more and more focused on the need to protect vulnerable customers. However, achieving this goal presents a significant challenge: balancing strict security and regulatory compliance with a seamless and positive customer experience. Fortunately, a solution exists – a single customer view.

Single customer view: Understanding your customers for better protection

A single customer view is a centralised record that brings together all the data a financial institution has about a customer, including information such as their accounts, products, transaction history, demographics, and even preferences. By consolidating this data into a single, unified view, institutions gain a more comprehensive understanding of their customers’ financial position and requirements.

By analysing customer data and transaction patterns, institutions can identify potential vulnerabilities and proactively reach out to offer assistance. For example, a sudden increase in spending or a withdrawal of a large sum of money could be an indicator of someone experiencing financial difficulty.

Protecting vulnerable customers

There are two main reasons why protecting vulnerable customers is a priority for financial institutions.

The first reason is compliance. The Financial Conduct Authority’s (FCA) Consumer Duty regulation mandates that financial institutions take steps to protect vulnerable customers. This includes ensuring they understand and consider a customer’s circumstances before recommending financial products or services. A single customer view allows institutions to fulfil these obligations by providing a clear picture of a customer’s financial situation and potential vulnerabilities.

The second reason for protecting vulnerable customers is the potential for positive commercial outcomes. By identifying vulnerable customers, institutions can offer them tailored financial products and services that meet their specific needs. This can lead to increased customer satisfaction, loyalty, and potentially, new revenue streams.

Building a single customer view

While the benefits of a single customer view are clear, creating one presents some challenges for financial institutions. These challenges often stem from internal factors:

• Siloed data systems and legacy technology: Many institutions struggle with data fragmentation, where customer information is stored in various unconnected systems. This makes it difficult to gather and consolidate data for a unified view.
• Cultural resistance to data sharing: Traditionally, data ownership within financial institutions may be spread across different departments. Implementing a single customer view may require a cultural shift towards data sharing and collaboration.

Fortunately, these challenges can be addressed by looking to other highly regulated sectors like healthcare and gambling.

• Innovative data solutions: These sectors have embraced innovative data solutions to overcome similar challenges. Financial institutions can explore new technologies such as data warehousing and data lakes to centralise and manage customer information effectively.
• User-centred design approach: Putting the customer at the forefront of the process is key. By focusing on user needs and preferences, institutions can design a single customer view that is not only secure but also user-friendly for both customers and internal teams.

An approach for a customer-centric future

Building a single customer view is a significant undertaking, but the potential rewards are substantial. By prioritising the needs of vulnerable customers, financial institutions can not only ensure regulatory compliance but also foster stronger customer relationships and unlock new business opportunities.

The key to success lies in a holistic approach that aligns design, technology, and mindset. Institutions must embrace a user-centred design philosophy, invest in innovative data solutions, and cultivate a culture of data collaboration within the organisation. By following these steps, financial institutions can create a future where a seamless and secure customer experience goes hand-in-hand with robust protection for vulnerable customers.

This shift towards a data-driven, customer-centric approach will not only benefit vulnerable individuals but also contribute to a more secure and prosperous financial services landscape for everyone.

To learn more about how a single customer view can empower your financial institution to protect vulnerable customers, download the full white paper.