Can technology make consumer spending more ‘responsible’?

Charities are increasing their pressure on the finance industry to do more to protect its customers from their own spending.

With Barclays introducing ways for its debit cards to be ‘switched off’ to certain types of spending, will we see such features extend further into all retail finance?

Currently, this ‘switch off’ feature is based on categories of spending, but soon it will extend to include types of retailers, or specific retailers such as gambling and leisure venues; as a result of the software and analytics employed becoming more intelligent. Such developments are thanks to an increased use of third party technology and support. New market entrants Starling and Monzo have already employed such tools, and it’s likely that the more traditional banks will follow suit, and soon.

However, many with legacy systems to deal with, and future digital transformation plans not yet incorporating these ‘switch off’ features, traditional banks will need to seek assistance in order not to lose ground on these early movers.

The likely impact on consumers is that those who employ high risk spending patterns may need to justify the use of the feature when trying to secure lending in areas such as vehicle finance or mortgages. This may be especially likely if they have had adverse credit in the past.

As the technology develops further and open banking becomes more widespread, we could see customers spending patterns, such as on-line gambling, erratic binge spending, or sudden changes to spending patterns affecting their ability to utilise credit cards, personal loans, mortgages and car financing. Access to such products may be restricted, based not only on the consumer’s credit score, but also on their spending history.

Key for the established financial institutions, will be how early they move to adopt these features, and thus reduce the impact from new market entrants. Their ability to respond rests with their legacy technology, and strategic partners.

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