Using Open Banking Payments to manage customer debt collections efficiently

Consumer debt has risen to unprecedented levels in the UK, presenting a serious challenge for companies that attempt to collect a growing mountain of unpaid bills. Recently, energy providers have resorted to injecting significant resources into financial support schemes in an attempt to lighten the load for those hardest hit. And many organisations in other sectors – from local councils to private landlords and housing associations – have taken steps to offer similar support.

The current consumer debt crisis hasn’t just illuminated how vulnerable consumer finances have become, but it’s also shone a spotlight on the inefficiencies of traditional debt collection methods. In this article, we’ll look at the scale of the challenge faced by many organisations and offer an Open Banking-powered solution.

The challenging issue of rising consumer debt

As of December 2023, UK households owed energy companies a record £3.2 billion in unpaid bills. (1) The increase is understood to be largely due to the rising cost of energy, compounded by the existing financial challenges already faced by millions of people across the country. While households are under significant financial strain, energy providers are being forced to invest millions into financial assistance.

EDF, the UK’s fourth largest energy provider (2), reported a worrying 52% increase in customers with unpaid bills between December 2022 and September 2023. (3) In response, the energy provider launched its ‘fresh start’ initiative, seeing it write off £1,250 in unpaid bills for thousands of its customers. And EDF isn’t alone in providing financial support to its customers. E.ON, the UK’s second largest energy provider, has invested £150 million of support as part of its ‘winter support scheme’. (4) And OVO, the UK’s third largest provider, has invested £40 million in its Customer Support Package to help its customers. (5)

Philippe Commaret, Managing Director of Customers at EDF, is concerned about the wider impact of customers falling behind on their payments: “More customers are falling deeper into debt with no real long-term solution in place to help them. Left unaddressed, the situation will drive up costs for all households, with other customers forced to pick up the bill.” (6) Meanwhile, EDF’s own research suggests nearly 65% of households are opposed to bill increases covering costs incurred by other customers.

In Scotland, over 270,000 people missed a council tax payment in 2023. (7) And because council tax is considered a ‘priority debt’, councils often use aggressive recovery methods such as bailiffs and courts to enforce the recovery of funds. In England, over three million people were taken to court for council tax debt between 2021 and 2023. (8)

In response, local councils are supporting people who struggle to pay their council tax in several ways. This includes offering Council Tax Support (a scheme to reduce council tax bills for people on a low income), providing exemptions and arranging new payment plans for those facing financial difficulties. The pressure on councils to recover funds is severe. With increasing costs, decreasing or frozen government funding and an increasing number of people falling behind on their council tax payments, local councils are facing a total funding shortfall of around £550 million. (9)

Rising consumer debt is forcing many companies and organisations to invest millions of pounds into support schemes, and this could result in bills going up to cover the investments. So what can be done?

Could Open Banking Payments provide a solution?

When utility providers attempt to reclaim debt, many rely on outdated Interactive Voice Response (IVR) systems to take payment over the phone. But while IVR technology was once cutting-edge, offering a way to automate customer service and payment processes without an employee picking up the phone, its limitations have become increasingly apparent as technology has progressed.

As well as being relatively complex for customers, requiring the input of payment details via touch-tone (often frustrating and prone to errors), IVR’s limited identity verification options leave the door open to fraud. Additionally, ensuring an IVR payment system complies with Payment Card Industry Data Security Standard (PCI DSS) requirements adds more complexity and significant ongoing cost for the utility provider.

At a time when customer experience and data security should be at the top of every company’s priority list, IVR systems are falling short in meeting those requirements. A new approach is needed that’s cost-effective, secure, compliant and offers a good customer experience.

Open Banking has been transforming the banking and financial services sectors in a variety of ways for several years. It’s enabled money management apps to aggregate several bank accounts into one central dashboard and is now introducing variable recurring payments (VRPs) which adjust based on a customer’s income or spending habits, all importantly with the customer’s consent.

With Open Banking, utility providers have the ability to reclaim outstanding bill payments in a much more customer-friendly, cost effective and secure way than existing IVR systems. Moneyhub now supports pay-by-link, giving customers the ability to make payments directly on their mobile devices without sharing payment details – providing peace of mind to the consumer and reducing the escalating cost overhead of data encryption for utility providers

Similarly for local councils, Open Banking could be used to take council tax payments on terms that are more viable for residents, resulting in increased council tax income and less money spent on support schemes and legal recovery costs.

How Moneyhub’s Smart Payments makes debt collection more efficient

Moneyhub’s Smart Payment technology makes use of Open Banking to enable companies and organisations to more efficiently and effectively support people who’ve fallen behind on their payments.

At the heart of Moneyhub’s Smart Payments lies the pay-by-link option: a simple yet effective and secure method of accepting payments. It enables utility providers and other organisations to send a payment request to a customer via email, WhatsApp message or even printed as a QR Code on a paper invoice. The link allows customers to initiate payments directly through their banking app, authenticated with secure bank-level biometric identification. As well as streamlining the payment process, it adds a level of security that IVR systems simply can’t match.

Another important feature, key to aiding the reduction of customer debt, is the forthcoming ability to automate variable payments. This allows a company to set rules that dictate the timing and amount of payment to request. For example, a rule could be set to request payment based on a customer’s financial situation, such as setting bill payment frequency to match their income frequency, allowing better budgeting. Today, Moneyhub is helping businesses prepare for Variable Recurring Payments, exploring commercial models that will redefine consumer propositions for years to come. 

Moneyhub’s Smart Payments technology offers a win-win situation for organisations and their customers. Customers benefit from an easier, more secure and more affordable method of making a payment. And  government organisations and businesses can benefit from a cost-effective, secure and compliant solution that improves cash flow since it increases the chance of a customer being able to make a payment, as well as minimising the lag between billing and collection. Importantly, Smart Payments helps improve the customer experience with a payment solution that’s both easy to use and secure, enhancing customer satisfaction and loyalty.

In essence, Moneyhub’s Smart Payments technology utilises the power of Open Banking to address the challenge of increasing consumer debt.

Find out more about Smart Payments.

References

(1) https://www.ofgem.gov.uk/publications/welcome-fall-price-cap-high-debt-levels-remain

(2) https://www.comparethemarket.com/energy/content/big-six-energy-suppliers/

(3) https://www.energylivenews.com/2023/12/15/edf-reports-52-rise-in-customers-with-unresolved-debt/

(4) https://www.eonenergy.com/newsroom/support-available-for-winter-energy-bills.html

(5) https://www.ovoenergy.com/customer-support-package

(6) https://www.energylivenews.com/2023/12/15/edf-reports-52-rise-in-customers-with-unresolved-debt/

(7) https://www.scottishhousingnews.com/articles/citizens-advice-scotland-over-270000-people-missed-a-council-tax-payment-in-2023

(8) https://inews.co.uk/news/council-tax-debt-3-million-uk-2387586

(9) https://www.lgcplus.com/finance/districts-forced-to-make-impossible-decisions-over-service-cuts-24-10-2023/

Wealth Management is Ripe for an Open Finance Makeover

Open Finance builds on the foundation and legacy of Open Banking, which has shaken up the world of current accounts and payments by opening up data for regulated providers, like Moneyhub, to access and share data, subject to customer consent.

Open Finance extends those data-sharing principles to a consumer’s entire financial footprint, including their mortgages, savings, pensions, insurances, investments and more.

Open Finance: A competitive advantage

The wealth sector is beginning to understand how Open Finance can enable greater personalisation of services, can cut processing costs and improve the suitability of propositions. And it’s not just about financial products: the data Open Finance surfaces is increasingly seen as a vital component of digital transformation and differentiation in a competitive environment.

Consumers can now access their financial data through trusted third parties, and as a result those third parties - which could be an adviser or wealth management firm will be armed with a full picture of a client’s assets and liabilities and be able to offer a never-seen-before level of personalisation for their products and services.

Open Finance opens up new markets

A new generation of investors are due to inherit around £5.5 trillion from their parents and have largely dismissed traditional wealth services as being out of touch with their digital-first, user-friendly and environmentally conscious needs.

Moneyhub supports advisers that are trying to reach a younger audience, through budgeting tools, rent recognition and sustainable investing and more.  

Open Finance in practice

One of our clients wanted to offer its clients deeper insights on the holdings in their investment funds, including fees, returns and ESG ratings.

That is a great ambition but in practice is hard to achieve because fund data feeds don't always include ISIN codes. We developed a way to identify funds by taking certain key data points, such as unit price, and cross referencing against Morningstar data to disambiguate. This enabled us to identify the key holdings within a fund and the ESG profile to highlight the green-ness of a portfolio or specific investment.

Open Finance: A win-win for consumers and wealth managers

This is a big win-win: Consumers benefit from holistic and insight-driven services and providers gain in terms of lower customer acquisition costs; lower cost business processes and compliance dividends.

There are plenty of other wins with Open Finance. Just take onboarding of new clients, for example: instead of the manual data collection processes of old, wealth managers can set up an Open Banking authorised request to pull client contact and identity information from banks.

Then there’s data gathering for advisors, gone are the days of trying to collate and make sense of client data scattered across multiple advisors and systems. Through Open Finance - and with their client’s explicit permission - advisors can access all of their client’s investment portfolios in one place.

By gathering income, expenditure, assets and liabilities together, wealth managers can accurately assess the client’s capacity for loss, the suitability of products and have a system to continually monitor any changes in circumstances.

Open Finance: Increasing your customers’ investing potential

Investing capacity depends upon people having available money. At Moneyhub, we call this available money Potential. It’s the money left after non-discretionary spend is subtracted from income.

Through Open Finance, you can offer your customers a complete view of their financial world alongside tools and content to help them increase their potential, and boost your bottom line.

But Open Finance is just the start!

Whilst Open Finance is important, the breadth of data and the depth of value that can be derived to the benefit of the customer and the firm, is not yet widely appreciated. Open Finance is only part of a wider Open Data movement that is transforming how we think, behave and act. 

The 3 business ingredients for financial wellness

This post is an excerpt from our latest report: ‘Financial Wellness. A gift for them, a gift for you’ that deep dives into research around how consumers feel about their pension and investment providers, and how providers can unlock business benefits through focusing on financial wellness.

Asking people to engage with their financial wellness is akin to asking people to engage with their GP surgery. They do it when it’s necessary; communication is sporadic and sometimes confusing – and it isn’t a relationship that’s nurtured for long term health. How much healthier could people potentially be if their GP surgery was actively engaged in their futures, today? 

This is the opportunity providers have in unlocking financial wellness with their customers; the chance to reimagine the relationship between customers and their money – and in doing so, become instrumental in helping them achieve their financial goals.For providers that do, the gift of primacy awaits…and it’s all wrapped up in financial wellness.

Ingredient 1: Data

For providers, the right data offers unique insights into a consumer’s wider financial habits, needs, behaviours, challenges and opportunities. Imagine if you could see that 50% of your customers also have a savings account with one of your competitors. You could tailor your marketing messaging and direct communications encouraging them to specifically move those funds from that provider to you, with an enticing offer you know will really resonate.

As for consumers, the benefits of viewing their entire financial data from a single location are game-changing. By enabling a ‘single view’ of their finances, consumers can begin to see the wood for the trees – making better-informed financial decisions for their tomorrow, based on today. 

Hidden habits, unnecessary outgoings and successful savings all come to the fore, helping consumers take control of their finances and search for new ways to support their lifestyle goals.

Ingredient 2: Tailoring

With insights gained and new opportunities identified, providers can begin to tailor offers and

personalise products that actually resonate with consumers. The key here is in using the data to define key differences between consumers. It’s these significant differences that providers must be able to identify and serve through Open Finance solutions; it’s by tailoring experiences that meet these needs that consumers get the most value – and providers edge ever closer in the race for primacy.

Of course, every consumer has their own financial story to tell. From where they are in their life stage, to their income levels and a host of external variables that dictate their financial priorities, there is no one-size-fits-all. Precisely where using data to tailor comes into its own. Open Finance technologies can drive specific people towards well-tailored choices, helping them embed healthier long-term money habits.

As financial institutions, you have the power – and responsibility – to show your customers what a good choice may look like. And if that looks like sacrificing a portion of that takeaway budget in order to contribute more towards their pension or other long-term investment each month, your business wins too. 

From millennials to Gen Z, high to low earners, consumers of all demographics with the want to start investing but lacking the know-how are critical to your opportunity as a financial institution to build trust and promote financial wellness.

Ingredient 3: The power of nudges

With data and tailoring now working hand in glove, behavioural-based intervention becomes the final step in unlocking financial wellness. Enter ‘nudges’. Insight-based notifications, updates and tailored information that inform customers on specific financial activities, they’re the vehicle of delivery for providers – nudging consumers to take action, and take control.

“Consumers make financial decisions every day, whether buying a car or a TV and whether or not to use credit or even to get credit. Pensions are part of a wider universe in real lives. Providers have a big role to play in expanding consumer financial understanding, either by targeted and easy to digest information when action is needed, or better still, a continuous programme of bite sized information delivered in an eye-catching way, as early as possible. Nudges as part of a dashboard covering all of a consumer’s finances is the ideal.” - Margaret Snowdon OBE

We can see from our consumer app user base that almost three in five users respond to financial notifications as part of managing their overall money and finances within the app. This shows the power of nudges in enabling greater consumer insight, engagement and action – especially when compared to the traditional annual statement in the post.

Financial notifications and nudges cover a range of messages – from spending and saving to income alerts – all of which fold into the experience ecosystem, making it easy for consumers to take the next best action with their money.

Download the full Financial Wellness. A gift for them, a gift for you report here →

Qualifying Pensions Dashboard Services (QPDS) enabling legislation comes into force

Government Pensions Dashboards rules forging ahead

His Majesty Treasury’s (HMT) qualifying pensions dashboard services (QPDS) enabling legislation comes into force

While there is still a little way to go before consumers are able to start using commercial dashboards to their full capability, this devlopment is an important step on the legislative journey to dashboards. It enables leading firms to start crystallising their plans. Developing a QPDS is a hefty undertaking, requiring around 3 years to develop, so those providers who have yet to start their journey towards delivering a QPDS need to start now. 

We know from research that consumers want to be able to see all their pensions and wider financial universe all in one place, and that this is how businesses can achieve better outcomes for their customers. What’s more this is becoming an increasing priority for the government. Indeed, recently the Pensions Minister Paul Maynard emphasized his commitment to dashboards at the Pensions and Lifetime Savings Association’s annual investment conference, encouraging firms to ‘get their data ready now’.

Market-leading firms, like Standard Life have already committed and started working towards the delivery of a commercial pensions dashboard.; Today’s development gives them and others greater legislative certainty meaning they can push forward with their QPDS implementation plans, getting ready to submit their QPDS applications to the FCA as soon as the FCA opens its QPDS Authorisations Gateway.

Below is a summary of where we are in the pensions dashboard journey, and what we can expect next. 

Commercial pensions dashboards are such a complex undertaking that they require four sets of rules to regulate them, from four different Government bodies:

• Department for Work and Pensions (DWP) Regulations in December 2022 created the legislative framework for dashboards (this created the legislative requirements for commercial dashboards which are referred to as a Qualifying Pensions Dashboard Service, or QPDS) - relevant link: https://www.legislation.gov.uk/uksi/2022/1220/part/2/made

• Now, 15 months on, HMT has amended its existing financial services secondary legislation by adding “Operating a QPDS” to the long list of regulated activities which are overseen by the Financial Conduct Authority (FCA).  This HMT Statutory Instrument amendment comes into force today: 11 March 2024 - relevant link: https://www.legislation.gov.uk/uksi/2024/169/made

So that’s two done, with two to go: but what are they, and when are they coming? The final two pieces of the dashboards legislative jigsaw are:

• The Money & Pensions Service (MaPS), through its Pensions Dashboards Programme (PDP), is going to publish a suite of Standards with which all QPDSs must comply.  And all QPDSs must be audited by an independent expert every year to ensure they do, in fact, continually comply with all of the MaPS PDP Standards.

• The MaPS PDP Standards for QPDSs include Design Standards which will ensure all QPDSs offer consumers the same, or a very similar, user experience.  There are also numerous other PDP Standards which control how QPDSs must operate in conjunction with the Government’s Central Digital Architecture (CDA) ecosystem for dashboards and data providers.

• The fourth and final legislative element for QPDSs are the detailed FCA Authorisation and Conduct of Business (COB) Rules.  These will cover what nascent QPDS providers must do in order to be authorised with PDS permissions by the FCA.  The QPDS COB Rules will cover what providers are allowed to do with their QPDSs, for example, Rules on what providers are allowed to do with the data about customers’ different pensions after they have found their pensions by using a dashboard.

• Shortly after that, the FCA will open its Authorisations Gateway to start accepting applications from firms to become FCA-authorised as QPDS operators.

• Once FCA-authorised, a QPDS can be connected by MaPS PDP to their CDA, to enable extensive end-to-end system testing to commence.

We're already working with leading providers to develop their dashboard offering, and deliver pensions clarity to consumers.

Very recently, the pensions minister Paul Maynard reiterated the Government’s dedication to dashboards, stating: 

“It is more important than ever that people understand their pension information to prepare for financial security in later life.

That is where dashboards come in. They are critical in my view and have the potential to change how savers plan for their retirement by allowing customers to view their information including the state pension, all in one place, online."

While it might seem worth waiting until final rules are announced, developing and launching a QPDS is an incredibly lengthy project, and it’s imperative that firms start right away if they’re looking to offer a dashboard to their members.

It is too big a risk to wait. Leading brands like Standard Life have recognised the impact great pension dashboards can have on their customers today and also the clear direction of travel the FCA is driving around better outcomes for the consumer.

Feature in Focus: Nudge Campaigns

What are Nudge Campaigns?

Nudges are insight-based notifications and updates that inform customers on specific financial information and encourage them to take action.

Nudge campaigns can be created to provide a mechanism for sending a series of related nudges, one after the other based on different trigger criteria, to a set of users that match filters defined in the campaign.

How can Moneyhub’s Nudge Campaigns benefit consumers and businesses alike?

We use data-driven algorithms and AI to analyse a customer's connected accounts and transactions to generate personalised financial insights, hints, tips and "next best action" nudges. These nudges are delivered within Moneyhub's white label apps or via API to enable customised nudges and journeys.

Key benefits include:

• Personalised insights based on a customer's unique financial profile and behaviours

• Timely and relevant suggestions on money management, savings goals, products & services

• Catalogue of standard nudges that can be configured plus ability to create custom nudges

• Real-time nudges and trigger-based campaigns via webhooks

• Increase customer engagement 

• Drive business value with nudges matched to products

• Flexible delivery within apps or via API for seamless omni-channel experience

• Rules-based nudges (e.g for account thresholds) plus AI nudges based on deeper analysis over time

• 33% average engagement rate on nudges that prompt immediate action like faster payments

Nudge Campaigns are available as part of our full Personal Financial Management platform, or as a an API that you can incorporate into your own app. Just get in touch with us to find out more →

Buy vs. Build - is it really the question you should be asking?

Many organisations grapple with whether to build or buy software. However, focusing on the how before the why, what and where is unlikely to set your project up for success.

Both buying and building come with their own advantages and disadvantages, and in some cases, a combination of the two is the ideal solution..

Advantages and disadvantages of buying or building

Buying software involves lower upfront costs, often includes training, and avoids the need for extensive recruitment and hardware purchases. One of the key advantages of buying is the speed of launching the solution. There's no time-consuming team-building process or complex internal regulatory requirements to manage.

On the other hand, building a solution allows for a dedicated team focused solely on the project. Leaders can make decisions faster without third-party delays and have the flexibility to adapt without fixed budgets or external constraints. However, building a solution can also involve more coordination, potentially causing delays and added complexity

If your financial services firm aims to deliver market-leading personal financial solutions, buying a platform capable of offering a variety of services like banking, payments, and aggregation would be beneficial. Building a platform of that scale may be beyond the resources of many organisations. 

But if complete development control of the digital experience is strategically vital, it's best to focus on building the solution quickly and testing it. Look for providers with a clear suite of APIs, such as Moneyhub’s API recipes, to simplify development execution.

Mythbusting buy vs. build

‘Buy’ options can not be customised

One myth is that "buy" options can't be customised. The truth is, customization is always possible if it brings value to the customer. A buy solution can often be tested with early adopter customers, allowing businesses to implement off-the-shelf capabilities while making smaller customizations along the way.

The need for speed?

While out-of-the-box build solutions can be fast for simpler requirements, buying solutions often create long-term value and brand relationships faster due to their extensive and pre-built impact. Building complexity, however, takes time. Once an in-house solution is in place, updating it is usually faster than buying a new one. A buy solution can help get a bigger option to market quickly, which can build a strong business case for further investment or future in-house development.

‘But I want to look different’

Concerned about looking identical to other organisations using a buy solution? Configurations and customisations can create a unique experience while still staying on brand. However, if you have a unique approach vital to your proposition, building the solution with API integrations allows for a tailored experience powered by the right data and information.

You don't really "own" the solution if you buy it 

Another myth is the idea that buying a solution means you don't really "own" it. While buying does involve purchasing the intellectual property, enterprise relationships often allow for discussions about data, branding, and even the user experience. Consider whether owning the software is necessary if it's an app that belongs to your customers. If technology is core to your product model, an API solution within an existing infrastructure or a new solution could be the strategic choice.

Build vs. buy - is it really the question you should be asking?

 Many providers now offer both buy and build options. Moneyhub, for example, can address both paradigms and has vast experience in solving complex customer requirements. By focusing on solving customer problems and delivering new experiences in the fastest way possible, companies that understand the value of their proposition and adapt to their clients' changing needs will enhance their chances of achieving goals and unlocking opportunities.

• Read about how we’ve worked with Standard Life, who white labelled our Personal Financial Management platform, to develop their financial wellness app Money Mindset

• Or, Lumio, who leverage our Data & Intelligence and Payment APIs to offer their customers a complete financial picture and enable them to grow their money on autopilot

The buy vs. build conversation should not be the primary focus. Instead, prioritise understanding the problem you're trying to solve and how to deliver the best outcome for your customers. Whether you choose to buy, build, or combine both approaches, your customers' needs should always be the most important consideration.

Want to explore what Open Finance can do for your business (and your customers)? Just get in touch →

Open Finance and Fact-finder: A recipe for better customer outcomes

The benefits of Open Finance are ready to be incorporated into businesses, the result of many product and industry developments. Open Finance continues the paradigm shift in financial services to give consumers the ability to leverage the power of their own data - helping businesses deliver game-changing products and services that are laser-focused on delivering more personalised experiences and better outcomes.

Open Finance is the next stage in the evolution of Open Banking. Open Banking mandated that individuals owned their own data and that banks had to give consumers the ability to share their data with authorised third parties.  

Open Banking has been a game changer for financial inclusion and product innovation, with over 11% of the UK population benefitting from Open Banking solutions. The problem is that Open Banking only covers payment accounts (such as bank accounts, credit cards and e-money wallets). It does not include investments, pensions, properties, mortgages, loans, and the other data which make up the rest of people’s financial worlds - limiting the potential benefit to financial wellness and inclusion. 

Open Finance extends Open Banking beyond payment accounts and allows consumers to get a truly holistic view of their finances.

Whilst Open Finance does not yet carry the same legislative obligation as its predecessor, Moneyhub is heavily involved in a number of industry initiatives to introduce various aspects of Open Finance. We will see the range of data available growing exponentially in the short-to-medium term.

How to get started with Open Finance

Just because there is no mandate doesn’t mean there is no data. Many firms have already gone beyond the Open Banking mandate to expose their data through APIs - meaning that innovators seeking to unlock the benefits of Open Finance can do so immediately. 

We recently launched a new API Recipe called ‘Fact-finder’, which illustrates what is currently possible. It draws people’s financial data into one view, increasing firms’ internal efficiency and enabling them to deliver personalised experiences empowered by access to rich data sources.

Fact-finder goes beyond account connections, bringing the whole financial picture into one view and applying Moneyhub’s analysis and intelligence to deliver the highest possible level of service to the end user.

It also shows that firms can use Open Finance to deliver better customer outcomes at every stage of their interaction. Feel free to get in touch to learn more about it!

Why should I care about Open Finance?

The Financial Services landscape is ever-changing and evolving, as are the challenges faced by financial service providers and financial advisers.

The rising cost of financial advice is widening the “Advice Gap” -  a troubling trend in which quality financial advice is only accessible to people with significant investable assets. This leaves people with fewer assets (but still significant sums of money) unable to access financial advice that would allow them to get the very best out of their money.

The FCA Consumer Duty regulations are further increasing the pressure on firms, mandating them to demonstrate fair value and positive outcomes for their clients while actively avoiding customer harm.

Seamless sharing of data is absolutely vital for solving both of these issues and driving new innovations, which will further help firms battle these challenges.

A number of cost-effective alternatives, such as robo-advisors or hybrid advice models, have recently come to the market, aiming to provide guidance where necessary, reduce the cost of advice and close the advice gap. This is great in theory, but in practice, a lot of the time, the responsibilities are just shifted onto the consumers’ shoulders, which can be daunting, time-consuming and prone to errors. As a result, we haven’t necessarily seen the adoption rates needed to really shift the dial.

The key to solving these issues is the seamless sharing of financial data, allowing consumers to connect, aggregate and share a holistic view of their finances. This will unlock the potential of robo-advice propositions and increase the efficiencies of traditional financial advisers.

Automated fact-finding onboarding could effectively triage consumers into the most appropriate area of advice or guidance for them based on their actual financial situation. Some people may just require hints, tips or guidance. Others may need some more specific financial advice that can be delivered through a robo-advice proposition. For some, speaking to a financial adviser is required, but the adviser will be armed with most of the information they need to provide comprehensive and personal financial advice.

Introducing Fact-finder…

Our Fact-finder API Recipe provides a holistic, in-depth snapshot of customers’ finances to enable the delivery of advice empowered by access to real-time data. It offers Open Banking and Open Finance connectivity, as well as house price lookup, pension connection, spending/ cashflow analysis, ISIN matching and nudges that encourage actions that improve financial wellness.

Firms that deploy Fact-finder can save on the cost of onboarding whilst reducing abandonment rates because they no longer have to do a key part of the work required to really get to know their customers’ unique financial situation.

Fact-finder is one of our range of API recipes that includes Smart Saver, which supports customers’ financial journey through personalised and automated saving, and Rent Recognition, which helps people improve their credit profile and access the financial advice they deserve.

What’s next for Open Finance? 

Fact-finder is part of our mission to enable financial services firms to bring the benefits of Open Finance to their customers. We already connect our clients to thousands of institutions and give them the ability to gain holistic insights into consumers’ habits, needs, behaviours, and aspirations.

Moneyhub partnered with The Investing and Saving Alliance (TISA) to develop a set of API standards for Open Finance. TISA’s ambitious Open Savings, Investments and Pensions (OSIP) initiative used Moneyhub’s enhanced sandbox to enable pioneering fintechs and financial services providers to experiment with data-sharing. Sandbox tests are an important part of developing Open Finance standards for the sharing of savings, investment and pensions data, which have the same security, data minimisation and user experience delivered by Open Banking.

The OSIP initiative was a first step beyond Open Banking, going beyond the mandate to provide API standards allowing the safe, fast and secure data exchange.

As well as TISA’s OSIP, Moneyhub has been working closely with the Pensions Dashboard Project. We are on the Industry Steering Committee and were the leading alpha dashboard provider. We now offer a sandbox that allows pension providers to connect to our Replica Central Digital Architecture (RCDA) and associated Test Harness to define, run, and re-run automated end-to-end tests.

We are giving our clients access to a Pensions Dashboard solution, once again allowing them to get ahead whilst awaiting clarity from regulators and the government. Dashboards aggregate pension information in one place to improve engagement by giving people unprecedented visibility of their savings - no matter how many pots with different providers they’ve got.

Standard Life, part of Phoenix Group, the UK’s largest long-term savings and retirement business, partnered with Moneyhub to become the first UK provider to commit to offering a commercial pensions dashboard.

Users can discover and view all their pension data, as well as bank accounts, credit cards, savings, property valuations, ISAs, loans, mortgages, and other financial products. By gaining visibility of all this information on the same platform, customers can make long-term plans based on a deep, up-to-date and straightforward understanding of their finances.

Bring Open Finance to your customers

With Moneyhub, you can bring Open Finance to your customers today and support their financial journeys. Get in touch to talk with our team of experts.

How Nudge Theory can support your customers’ financial wellbeing and bolster Consumer Duty compliance for your business

There has been a lot of interest in Nudge Theory over the last few years - but what does it mean in practice, and more importantly, how can it help promote financial wellness, and bolster Consumer Duty compliance for your business?

What is a nudge?

In a nutshell, nudges are interventions, which can be both large or small, aimed at getting people to act in their own best interest. It could be as simple as a sign placed near the door in an office to remind employees that turning off the light when they leave will reduce electricity consumption, or supermarkets influencing people to eat healthier by putting fruit and nuts beside checkouts instead of confectionery. 

That said, nudges are at their most effective when personalised, relevant and timely, and that the individual maintains freedom of choice and feels in full control of the decisions they make.

Nudge Theory

As described by Imperial College London, ‘Nudge Theory is based upon the idea that by shaping the environment, also known as the choice architecture, one can influence the likelihood that one option is chosen over another by individuals.’ 

The concept was introduced by Richard Thaler and Cass Sunstein in their book: ‘Nudge: Improving Decisions about Health, Wealth, and Happiness’ in 2008 and was originally created to influence health indicators by inducing behavioural change (think 10,000 steps). Indeed, findings from an Imperial College London study estimated that health-related nudges were responsible for a 15.3% increase in healthier diet and nutritional choices.  

Now apply that to the finance world, and you can see how nudges based on real-time insight could be a true game changer. 

When we speak about nudges in a financial context, we are usually referring to specific messaging displayed to customers throughout their journey of product application or a product life cycle, to promote a positive action.

However, where the magic happens is when nudges are combined with rich, real-time financial insight about an individual customer, along with on-brand messaging to truly reflect your unique brand tone of voice - meaning as a business, you can proactively communicate with each customer in a hyper-personalised way to significantly influence positive behavioural change. 

But the really clever new magic is when Moneyhub link these messages together!

Chained nudges and Consumer Duty 

Moneyhub’s pioneering methodology of ‘chaining together’ nudges, encourages and then continues to respond to the natural progression of behavioural change, providing insight, support or useful education material at timely moments - a capability unique to Moneyhub. These ‘chains’, or journeys, mean that nudges are relevant and appropriate for each customer - relevant to their financial situation, their mindset, their relationship with their bank or provider, providing appropriate wording and encouragement at the right time - thus achieving ultra-high engagement and conversion.

Moneyhub creates these personalised nudges based on triggers from our market-leading, AI-powered decisioning engine. Data-powered nudges influence behavioural change even more effectively, by prompting timely, relevant actions when customers are most receptive. For example, a mortgage lender could simply nudge customers when their loan-to-value ratio passes a threshold. But imagine when the lender can proactively engage with a customer who isn’t quite eligible for a lower rate. Supporting them to make affordable over-payments so the customer at the end of the term now becomes eligible for the lower rate.

Data-driven insights made possible by Moneyhub’s AI-powered categorisation will ensure your business achieves higher engagement and conversion rates - in addition to being able to evidence Consumer Duty compliance. 

Use cases

1. Detect and Intervene - Always-on optimised nudges, supporting & evidencing Consumer Duty for better outcomes

The Challenge

The new Consumer Duty meant that one of our large enterprise clients needed to accelerate its strategy to improve customers' financial situations, and implement a messaging framework that could Detect, Intervene and Report on customer outcomes.

The client’s existing messaging platform already provided communication to customers through product silos, but the challenge was to create an overarching messaging framework to analyse customer data holistically and intervene with personalised, chained nudges when vulnerability or a bad outcome was detected.

The Solution

Moneyhub implemented Detect and Interviene,  Moneyhub’s always-on customer messaging approach, enabling timely, relevant and personalised nudges to encourage an alternative outcome based on customers' historic and current financial spending behaviours. Using holistic customer's data, mapped across the usage of all their financial products, our client is able to detect characteristics of vulnerability, and customers who are at risk of poor outcomes, going on to provide appropriate chained nudge interventions to continually recommend and encourage alternative actions for improved outcomes.

2. Detect, Intervene and Report.  An evidence based approach to encouraging good outcomes

The Challenge

Another large enterprise client wanted to evaluate a specific customer segment under their Consumer Duty compliance activity, and was looking for a solution to quickly detect outcomes and fair value at a holistic customer level, and provide evidence of the interventions to the FCA and its own board.

The Solution

Moneyhub built a customer metric and detection framework, and decisioning model across multiple products for the customer segments in question. When run across the holistic customer data, the client could quantify situations, actions and customer behaviours thus enabling the detection and projection of consumers’ outcomes.  They could also better identify if a customer was, or could in the future become, at risk of becoming vulnerable. In addition, the framework provides a Consumer Duty outcome report to evidence compliance, and an always-on messaging framework to continually nudge and encourage customers from good outcome to good outcome.

Ready to get started?

Get in touch to see how Moneyhub can help support and engage your customers with our Detect, Intervene and Report solutions using chained nudges to bolster and accelerate your Consumer Duty strategies in 2024 and beyond.

Open Finance and the FCA's Advice-Guidance Boundary Review

What is the key to making consumers’ decision making simpler, restoring trust in long term savings and unlocking untapped financial potential? Data.

Who, or what, knows you best?

All powerful and sitting comfortably in my pocket is my smartphone. Though weighing just 171 grammes it knows when I stir from sleep and when I switch off for the day. It knows details of my commute – the home I leave, the workplace I reach, even my recreational running routes. It knows the books I read, the movies that I love, and even for how long I boil my eggs in the morning! Against this backdrop of hyper-connectivity and swathes of data, comes the FCA’s advice-guidance boundary review.

Why change?

Outlined in the FCA’s DP23/5 consultation are three fundamental changes which create huge opportunities for firms ready to embrace data powered digital experiences:

• Loosening of the current ‘binary’ advice regime

• Targeted support for customer groups built around shared characteristics i.e. ‘customers like me’

• Simplified advice to tackle less complex needs

These proposals represent a significant stride toward modernising financial services. Primarily, they aim to resolve three key flaws in the current long term saving, investment and retirement planning markets, namely:

• The cost of taking advice: Trying to eliminate all consumer harms by throwing people, process and compliance at the problem mean current models are too expensive for most consumers

• The cost of not taking advice: Consumers are missing out on the potential for higher returns or make bad decisions because it’s all too complicated

• Consumer capability: Not knowing when (or who) to go to for help, or if it will be worth it

A better way?

What if there were a way to address all of the above that was widely accessible, was automated, repeatable and scalable to keep costs low, and where a consumer’s own data provided an audit trail to evidence suitability and constantly improve upon consumer outcomes?

Moneyhub’s smart Open Finance platform gives firms the tools and intelligence they need to identify customers who might benefit from one of the new forms of guidance or support. Firms can quickly and easily gather consumer data upon which to base their guidance and create automated next best actions, on a 121 basis or for cohorts of customers, including signposting to full advice or opening and managing simple products. When a customer’s personal circumstances or a firm’s products change, Moneyhub can identify the changes and nudge the customer to take action to keep them on track.

Bridging the gap

The FCA’s consultation paper highlights that only 8% of UK consumers received full financial advice in 2022 and is seeking to examine how innovation could expand the market to new forms of advice and support because 'The gap between holistic financial advice that is unaffordable for many, and guidance that is free to access but not personal to the consumer, is simply too vast’.

Moneyhub’s own innovation research with consumers routinely shows that when it comes to their money most people want to know just three things: What have they got, are they doing ok, and what to do next? However, even asking simple questions about their personal finances can create fear, complacency and disengagement amongst many people for whom getting advice about their money is neither affordable nor accessible.

By contrast, allowing customers to share their financial data using Open Banking and Open Finance provides a rich and accurate picture of exactly what they have and how they live. Data can identify opportunities to help customers such as finding spare cash that could be put to better long term use, visually showing them the impact of regular saving and the effect of compounding, or gathering all of their retirement assets in one digital location to show them a range of retirement possibilities based on their own personalised goals and as a precursor to full advice.

Why wait for change?

At Moneyhub we are firmly of the view that combining our technology with the FCA's proposals to relax the advice-guidance boundary represents one of the most exciting opportunities in a generation for financial service providers to redefine their approach to long term savings and better serve their customers.

Leading financial services firms such as Standard Life, L&G, Lloyds Bank, Scottish Widows, Mercer, Aon and Nationwide Building Society already trust Moneyhub’s technology because they see the potential for superior customer engagement and consumer outcomes through data powered customer journeys.

The FCA’s consultation does not close until the end of February 2024 however there’s no need to wait. Moneyhub’s white label Open Finance platform is helping consumers take control of their money and increase financial wellness across a range of savings, borrowing and retirement planning use cases. Moneyhub’s digital tools offer the prospect of supporting many more consumers with their financial decisions in future. Imagine a world where, over breakfast, your customers will quickly approve an automated sweep of some spare money to their ISA whilst waiting for their eggs to boil.

Simon Ripton is Moneyhub’s Proposition Director and a former IFA

Introducing Next Best Action: The next-generation update to Moneyhub’s AI-driven, Always-On Decisioning and Messaging Platform

With over 47.5 billion financial transactions taking place each year in the UK, how can your business quickly and easily aggregate, enrich and analyse this data to provide rich, actionable insight to engage customers, inform future business strategy, drive growth, and support Consumer Duty compliance - all without costly, complex integrations?

Say hello to the AI-powered, Always-On Decisioning and Messaging Platform from Moneyhub, ready to revolutionise your customer journey with Next Best Action technology: automated, personalised interventions for your customers - made at exactly the right time. 

AI powered categorisation, next level insight

As a lender, you have access to huge volumes of customer data - from financial transactions, account information, demographics and more. Insight from this data has incredible potential for your business, but making sense of it manually, in real time, is impossible. Advanced AI tools are the key to interpretation: ultra-accurate categorisation, instant identification of trends, and translation into powerful insights enable firms like yours to gain a truly holistic view of your customers and develop hyper-personalised and timely customer communications strategies to nudge customers toward better financial outcomes - increasing customer loyalty and trust, boosting revenue, and bolstering Consumer Duty compliance.

Moneyhub’s AI-Powered, Always-On Decisioning and Messaging Platform is already revolutionising the way many financial institutions, including CMA9 banks and leading lenders, operate - with Moneyhub’s partners:

• Confidently lending to up to 30% more customers

• Reducing default rates by up to 50%

What impact could that level of growth mean for your business?  

Key features and benefits

Hyper-accurate categorisation 

Not all categorisation engines are created equal. Using machine learning and natural language processing techniques to categorise, enrich and analyse customer data, the platform takes billions of transactions and categorises with acute accuracy, allowing you to make sense of your customer financial data in a way never seen before. Identify key risk indicators within your customer base, such as the detection of gambling transactions with industry-leading accuracy of 99.46%, allowing you to act on this information to make better informed lending decisions.

Learn more

Market-leading insights and analytics

Via powerful AI, the Always-On Decisioning and Messaging Platform instantly identifies risks and trends that would otherwise be buried in the ‘noise’. Valuable customer segments are highlighted, such as those deemed as vulnerable, allowing you to deliver hyper-personalised messaging to prompt the right action for a particular individual, at the right time. 

Learn more

Always-on customer messaging, via chained nudges

Build a community of customers who trust and engage with your products and service in a whole new, deeper way. Data-powered chained nudges influence behavioural change by prompting timely, relevant actions when customers are most receptive. Each customer is taken on their own journey at their own pace, leading to a situation where every customer gets a unique interactional experience with your business. 

By integrating always-on messaging via chained nudges, businesses like yours can quickly start to engage with customers in a far more ‘human’ way through your own data, behaviours and brand language, building a different narrative across multiple different customer cohorts, to message and direct customers towards the best course of action. For example; mortgage lenders could nudge customers when their loan-to-value ratio is high, prompting them to consider refinancing at a lower rate, whilst banks may nudge customers to consolidate high-interest debt when account balances rise.

The platform uses Moneyhub’s pioneering methodology of ‘chaining together’ nudges to support consumer education towards positive financial behaviours - a key aspect of the Consumer Duty. These ‘chains’, or journeys, mirror the natural progression of behavioural change, providing insight, support or useful education material at timely moments; a capability unique to Moneyhub. Nudges are automatically generated based on triggers from our market-leading categorisation engine, meaning that nudges are relevant and appropriate for each customer, thus achieving ultra-high engagement and conversion. 

Learn more - where would we like this link to go? Is here ok?

[Insert image of nudges from a client here - not PFT]

Automated, ultra-accurate decisioning

View an applicant’s entire financial world - something not possible with credit checks alone. Get ready for automated, instant Affordability checks with real-time income and spending transaction insight, which alongside your own risk metrics, helps your business make faster, automated lending decisions. Detect when an applicant’s financial situation changes throughout a product’s lifecycle and provide support, reducing harm and encouraging lifetime customer engagement.

Consumer Duty compliance reporting

With Moneyhub’s AI-powered, Always-On Decisioning and Messaging Platform, access powerful Consumer Duty reporting tools that can be used to evidence better customer support, actions and outcomes. The Consumer Duty raises the bar for FCA regulated firms, expecting that consumers should receive communications they can understand, products and services that meet their needs and offer fair value, and that they get the customer support they need, when they need it, so that they can use and enjoy the full benefits of the products and services they buy. 

For the last 10 years, Moneyhub has been providing technology to financial institutions to enable them to understand their customers’ financial lives by tracking, categorising and analysing behaviours in relation to spending habits and their overall financial situation. This consumer view, via our personal wealth management app, is unique to Moneyhub and enables machine learning (via consumer feedback) to constantly improve categorisation and insight, meaning your business can now take appropriate action via chained nudges with a higher degree of accuracy than any other categorisation engine on the market - and report on actions taken to clearly evidence Consumer Duty compliance.

Learn more

Rapid implementation

With a simple ‘plug and play’ integration option, there’s no need to wait for resource to be allocated and the technology to be designed and built. Moneyhub’s platform can be rapidly incorporated into your existing tech stack, meaning your business can start seeing positive results straight away.

What’s more, the platform is ultra-extensible, and can be fully integrated with other systems as needed. For example, adding outside data to your existing data set can be easily achieved by including Moneyhub's Open Data Aggregation Engine - giving access to the widest range of consent-driven personal financial data on the market, to support holistic decisions, including cross-sell.

Ready to see how Moneyhub can benefit your business in 2024?

Get in touch to see how Moneyhub’s market-leading platform can help harness the power of your customer financial data, boost your business growth, and support Consumer Duty compliance into 2024 and beyond.
Read more: Improving the customer lifecycle

Financial wellness must be as accessible as BNPL credit

At the beginning of November, City AM reported that adults in Britain are set to plunge themselves into a frightening £3.7bn worth of Buy Now Pay Later (BNPL) debt before Christmas. As the news swept through our inboxes at Moneyhub, so did a growing sense of alarm.

The strain this puts on the financial health of both individuals and their families ends up significantly impacting mental wellbeing. On top of dealing with spiralling finances, familial relationships are put under strain, sense of isolation increases, and children may even end up carrying poor money habits into their futures.

A study from the Royal College of Psychiatrists found that half of all adults with a debt problem also live with mental ill-health. This ranged from a consistent feeling of anxiety and low mood to a diagnosed mental health condition.

Worrying about debt can affect sleep. Losing out on a good night’s sleep can not only affect  mood and energy levels, it can also affect someone’s ability to work or maintain relationships.

Add Christmas into the mix - 3 in 10 claim their mental health takes a ‘nosedive’ over Christmas, with affording presents and food (29%) and worry over January debt (29%) among the greatest contributors - and it’s a recipe for disaster.

Fighting convenience with convenience

BNPL is so attractive to so many, because it’s so convenient. Unregulated credit is now just a few taps away, enticingly positioned at the checkouts of e-commerce sites; the logos are bright, the branding is aspirational. Debt has never looked so appealing.

Consumers can now take on instant debt for a takeaway, clothing or cleaning supplies. Unfortunately, it’s people that may need credit for household goods who are often the most economically vulnerable. As history has shown, when the risks of some financial products are poorly communicated, those products can leave those in dire need of support even worse off. 

Data from Moneyhub’s own app shows that 25% of BNPL users over a 2 month period also spent more than 30 days overdrawn in excess of 90% of their agreed overdraft limit.

Of these users, their spending on BNPL repayments was, on average, 12% of total monthly expenditure.

One of the key pillars of financial wellness is providing tools and resources that foster financial resilience and the development of healthy money habits. And, in line with Consumer Duty regulations introduced by the FCA earlier this year, financial services firms shoulder some of the responsibility for helping consumers get there.

Open Finance solutions, embedded in tools consumers already use, such as banking, pensions or investment apps, offer a practical way forward. 

66% of Brits check their mobile banking app at least once a week. Technology like Moneyhub’s means they could also connect all of their other bank accounts, loans, pensions, mortgages, credit cards, and access budgeting, analysis and forecasting tools, a Personal Debt Manager, embedded credit scoring, an Emergency Cash Builder and set longer term Savings Goals, at the exact same time, through the exact same app.

These tools can help people make more informed financial decisions (such as waiting for those trainers to go into the sale, rather than taking on BNPL debt) and empowers them to cultivate healthy money management habits, eliminate debt and build essential rainy day funds.

The very idea of engaging with finances, assessing income and expenditure and making a budget can evoke feelings of overwhelm and anxiety in the average consumer. We must make these steps as easy, intuitive and convenient as possible for people.

By making financial wellness solutions just as accessible as credit options, we can bridge the gap between potentially harmful convenience and responsible financial practices. Empowering individuals with the knowledge and tools to navigate their finances effectively creates a win-win scenario. Not only do customers achieve better financial outcomes, but businesses also establish stronger, long-lasting relationships built on trust and mutual benefit, with consumers whose capacity to save or invest is increasing.

The £3.7bn projection may be music to the ears of retail, but it should sound the alarm for financial services, serving as a stark reminder of the Consumer Duty regulations and encouraging closer collaboration with consumer wellbeing groups.

To find out more about what Open Finance can do for your business, and your customers, just get in touch →