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Guest blog: Open Banking and vulnerable communities – can it help?

Following on from their recent presentation at the BSA's 2023 Annual Conference, Akil Benjamin Strategy Director, COMUZI and Erel Onojobi, Financial Health Lead, Impact on Urban Health, talk through their research on how Open Banking apps can be used to help improve vulnerable customers' financial health.

Speaking at the Building Societies Conference 2023

In 2021, Impact on Urban Health commissioned design agency COMUZI to answer the question:

“How might be make use of Open Banking technology to improve the financial health of people on low incomes with health conditions?”

The 18-month research project was co-designed with organisations working with communities in Lambeth and Southwark – Stockwell Partnership, Rooted Finance and Shelter London – with input from consultant Bailey Kursar.

In the first phase, we worked to understand the financial needs of people living with one or more long-term health condition. In the second phase, we selected Open Banking apps that could address these needs and ran a 74- day trial of the apps with residents, completing a diary study to gather feedback.

Our Participants

In terms of who we asked to participate in the project, we worked with the same demographic criteria, which included residents of Lambeth or Southwark in London, people of working age with a focus on speaking to Black and other ethnic minorities, members of the Portuguese speaking community, and those on a low-incomes.

In addition to this, we also spoke to people who had a chronic health conditions, physical disability, mental health conditions, or were neuro-diverse.

The Open Banking Apps

Our participants tested the following Open Banking Apps: Snoop, Plum, Money Dashboard, Credit Ladder, HyperJar, nous and Lightning.

Overall, the apps participants found most useful helped them evaluate their spending patterns and identify potential savings, leading to positive habit changes and mind-set shifts. On the downside, we found that extra information could also exacerbate anxiety in some users.

Participants also had concerns about sharing data and technical challenges in terms of the apps being able to link to participants’ accounts to analyse spending and opportunity. There was also some unease about some of the business models behind the apps, which felt manipulative. Some participants also felt the apps were not tailored enough to their circumstances, in particular those on lower incomes. Low awareness of the Open Banking apps we tested was also a problem.

Good – but it needs to be better

So – can Open Banking improve the financial health of people on low incomes with health conditions? Our study shows that yes, Open Banking apps can improve financial capability/ resilience, which if maintained in the long-term, is shown to foster better health.

Yes, there are challenges that need to be overcome and our full report makes a number of recommendations for Government and regulators, banks and Open Banking app providers.

There needs to be more research into Open Banking, in particular around potential social impact use cases. In our study, participants with mental health conditions and neurodiversity struggled to continue using Open Banking apps and a larger study is needed to create apps that better support their needs.

Ultimately, we believe people from the communities most vulnerable to the increased cost of living and its negative impact on health should be given more support to engage with Open Banking. This could be done by either signposting people to the tools already available or incorporating Open Banking technology into their own apps and services.

People from vulnerable communities have the same aspirations for financial security and putting a roof over their heads. With the right adjustments, Open Banking tools can provide a tangible means for people from all communities and income levels to better understand their finances and build a better future.

Next steps

Download the full Open Banking for Financial Health report here.

(This article was first published in the BSA's inhouse magazine Society Matters in June 2023.)