FinTech & FinCap: what are the risks and opportunities for our clients? November 2017 This presentation can be used as a foundation for your own; please feel free to add more slides and amend as you wish.

What is FinTech? FinTech refers to new and existing companies that leverage new technology to create new and financial services for both consumers and businesses. 

How could FinTech improve capability? There are some key features of FinTech which are relevant to financial capability practitioners: It makes financial services more interactive It makes it easier to keep track of spending FinTech enables us to personalise the products and services we use It allows for the automation of habits and behaviours that build financial resilience There is the potential for socialisation and behavioural norms to be introduced Use financial data to identify financial difficulties earlier Move away from a system of getting Signing up to text alerts or mobile banking apps reduces the amount of overdraft charges incurred by 5%, and signing up for both reduces total fees by a quarter. The average consumer now interacts with their bank 3.5 times a month, up from 2.3 times in 2011,4 which might mean keeping a closer eye on finances. Monzo – automatically logs and categorises everything you spend, you can set limits on different categories - visualisation Can the set limits on particular categories, shape and manage a budget, set goals and use commitment devices. Also bespoke services like ACASA Ring-fencing; automated savings products; auto-switching Open banking & data-sharing – ‘people like you’ Patterns; notification of changes in spending behaviours – ethics and customer demand

How might FinTech undermine financial resilience? Whilst FinTech does create some opportunities to embed positive financial behaviours is does create some risks as well: Automation may cause people to disengage Defaults may act as an anchor leading to inertia Digital by default is accelerating branch closures It is making spending and transacting frictionless People will need an increasingly sophisticated understanding of how their financial data will be used and shared Automated process should introduce review or re-engagement points We have already seen this with CCs and auto-enrollment – initially beneficial but detrimental in the long term Banks are set to close a record 762 branches this year One click ordering can lead to impulsive spending – contactless does not have the same pain as ‘cash’ – hot state Free to use services monitise data

Does the growth of FinTech risk creating new forms of digital and financial exclusion? 5 areas are – manage information, communicate, transact, problem solve, create

Citizens Advice clients face a digital skills gap Digital Skills survey of clients carried out in 39 local Citizens Advice offices in Feb 2016. Around 3000 clients responded. Approximately 55% of Citizens Advice clients had basic digital skills compared to 77% of the UK population 1 in 5 had no digital skills, nearly double the UK population as a whole Only 2/3 could complete an application form online Just over 1 in 3 (36%) of clients either keep a record of how they have spent their money or check their bank statements 5 areas are – manage information, communicate, transact, problem solve, create

Citizens Advice clients face a digital access gap Digital Skills survey of clients carried out in 39 local Citizens Advice offices in Feb 2016. Around 3000 clients responded. Approximately 54% of Citizens Advice clients had internet access at home compared to 86% of the UK population 10% only had access via a smartphone 15% of clients responded that they don’t have access to the internet at all Only 6% without access had all 5 basic digital skills Mention July 5th report.

Our clients may have a preference for non-Digital A significant cohort of clients (20%) do not wish to engage with digital product and services: A strong sense that it is ‘not for me’ - Government agrees? Digital makes it different – can manage other channels Lack a ‘digital foundation’ e.g. email address, barrier to access Don’t believe information is secure or activity is monitored If you read around policy documents in this area there is a sense that this problem may ‘die off’ – not true

The Cookie Monster Tracking data – provide information about yourself that is considered personal data under the data protection act, consent to be tracked etc.

How can we support our clients?

Digital Money Coach Pilot A one-year pilot with 5 local Citizens Advice exploring how we can support clients to build the digital capability and financial resilience. A new volunteering role was created – the Digital Money Coach A new suite of learning resources were developed – close relationship between tech use and financial capability Training and on-going support was offered to bureaux to build capacity and capability in staff and volunteers Was a process of co-design and not a one-sized fits all model Two distinct but related strands of work ‘assisted digital and ‘digital skills’ Completeness in volunteering roles Learning resources have gone through 20 + versions based on bx and client feedback

‘Assisted Digital’ Service for those clients requiring space and support online access Digital suites where clients can access the internet – fair use policy but not prescriptive on what activities are permitted. Activities undertaken include bidding for social housing, CV building, job searches, price comparisons, booking holidays and setting up email and Facebook accounts. Clients can be referred for advice if required Advisors can refer clients for assisted digital when the advice remedy contains an online element and the client has indicated they require support Do with rather than do for – much like a fincap work helping to file and open letters this work can build a digital foundation – get an email address, take the first steps, recognise the value.

DMC Client Outcomes 60% of clients said they now feel more able to use digital technologies and 60% said they had made changes to the way they use digital technology since using the service.   62% of clients said they now feel more able to manage their energy bills and 65% said they had made changes to the way they manage their energy bills since using the service. 48% of clients said they now feel more able to manage their finances. 38% had made changes to the way they manage their finances since using the service. 89% of clients rated the service as good or very good and 84% said they were likely or very likely to recommend the service to others Explain lower fincap – explain how model is developing – Digital tender for assisted digital – expansion and deepening of coaching, ask for questions

How should we work with FinTech providers?

The FinTech ‘dropped curb’