Fin Tech Fin Cap what are the risks

Fin. Tech & Fin. Cap: what are the risks and opportunities for our clients? November 2017

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

How could Fin. Tech improve capability? There are some key features of Fin. Tech which are relevant to financial capability practitioners: • It makes financial services more interactive • It makes it easier to keep track of spending • Fin. Tech enables us to personalise the products and services we use • It allows for the automation of habits and behavioursthat build financial resilience • There is the potential for socialisation and behavioural normsto be introduced • Use financial data to identify financial difficulties earlier

How might Fin. Tech undermine financial resilience? Whilst Fin. Tech 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 anchorleading 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

Does the growth of Fin. Tech risk creating new forms of digital and financial exclusion?

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

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

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

The Cookie Monster

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’

‘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

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 technologysince 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 billssince 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

How should we work with Fin. Tech providers?

The Fin. Tech ‘dropped curb’