Banks could use data to identify and help people who may fall into debt

A new Money and Mental Health Policy Institute report is calling for banks to monitor their customers to prevent them from falling into financial difficulty despite privacy concerns

Banks could use personal financial data to prevent people from falling into debt, according to a new report.

The Money and Mental Health Policy Institute study acknowledges the obvious privacy concerns that would come from enabling financial institutions to monitor their customers’ date. But their poll suggests that 50 per cent of UK adults believe their bank or building society should keep track while only 12 per cent disagree.

MMHPI have called for customers to be given controls and choice on how they are monitored by banks to bypass these privacy concerns.

But they say this preventative power would be particularly useful for people with mental health problems, who may struggle to manage money due to common symptoms like memory problems or reduced concentration.

MMHPI chief executive Helen Undy reckons that introducing monitoring could even “save lives”.

“Barely a week goes by without a news story about how companies are using our personal data, and the impact that’s having on our privacy and safety,” she said. “While these concerns are legitimate, focusing solely on the dangers risks overlooking the enormous opportunity data can present – with the potential to even save lives.

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“Around 100,000 people in problem debt attempt suicide each year in England, with many suffering in silence and struggling to ask for help. Something as simple as a bank checking in with a text message if someone’s data shows a sudden drop in income, or signposting them to extra support, could make all the difference.

“And the good news is that consumers are on board – so long as firms give people control over how their data is used, concerns about privacy do not outweigh the strong appetite for this important work.”

Something as simple as a bank checking in with a text message if someone’s data shows a sudden drop in income, or signposting them to extra support, could make all the difference

The report insists that financial firms could use text messages to inform customers that they are spending more than usual or to signpost them to debt advice.

Two-thirds of people say it would be useful for their bank or building society to spot financial problems as they develop and an identical amount wanted them to proactively offer support when things go wrong.

But the idea is not without risk, with half of the UK adults polled by Populus saying they have privacy concerns.

The MMHPI report is calling for an opt-out option to tackle this, and is calling for banks to involve customers in building interventions while also asking the Financial Conduct Authority and the Information Commissioner’s Office to publish joint guidance on the matter.

“We are always looking for new ways to support our customers to make it easier for them to manage their finances, and are pleased to back this study,” said Raymond Pettitt, the head of retail segments at Barclays, one of the banks who have backed the idea. “We hope this report shines a spotlight on how the industry can further support customers in vulnerable circumstances.”