With the global economy in a state of suspended animation due to the COVID-19 pandemic, financial services providers must pull out all the stops to ensure that individuals and small businesses suffering financial hardship are receiving appropriate support and assistance.
The ongoing COVID-19 pandemic has seen us endure a public health crisis on an unprecedented scale. It’s deleterious effects on the economy have pushed global markets to the brink of depression and caused large-scale job losses, industrial hibernation and small business bankruptcies. For those already contending with an income shock, the pressure to meet the basic costs of living has merely compounded the worry and stress currently being experienced. The financial services community therefore has a leading role to play in providing support and protection to customers, and ensuring financial catastrophes are averted.
How Can FinTech Help?
In the present conditions of extreme economic uncertainty, the innovation and agility of FinTechs could prove to be a real asset for financial service providers (FSPs). Whilst universal measures such as deferred repayments or temporary cessation of bank charges will go a long way to providing relief, FSPs could go the extra mile by leveraging the technology available within the FinTech sector to deliver personalised, contextual solutions for those experiencing financial hardship.
With individuals unlikely to be able to visit their local branch for some time, digital solutions tailored to individual circumstances have taken on a new significance. Open Banking ushered in groundbreaking new levels of insight into the financial health of individuals and businesses, and it is this technology which could efficiently solve many of the unique challenges being posed in the current circumstances. These include:
- Analysis of real time data from every bank account owned by an individual, providing a holistic, up-to-date picture of each individual’s financial health
- Use of historical transaction data to extrapolate near-term forecasts of income, expenditure and balance, allowing FSPs to anticipate adverse events such as non-repayment of credit obligations
- Instant analysis of business balances and cash flows so that loans can quickly be diverted to those businesses who need it the most
- Identify indicators of financial vulnerability, for example those who are resorting to short term high interest products out of desperation. FSPs could then step in to offer a better product
- Identify those who have suffered an income shock, and also identify the nature of that shock (e.g. job loss). This could be used as a basis for offering guidance, or short-term support in the form of an appropriate line of credit
- Provide white-labelled personal financial management tools to help individuals, particularly the more financially vulnerable, better manage their day-to-day finances
The effects of the COVID-19 pandemic have left many individuals and businesses in a precarious financial position. By working in collaboration with Open Banking FinTechs to deliver personalised solutions to individuals and businesses, FSPs can meet the unique challenges being faced by consumers in these unprecedented times and help ease the oppressive financial conditions many of us are experiencing. Such actions could have a positive and long-lasting impact on customer’s lives.
FriendlyScore sends our best wishes to everyone during this difficult period. If you feel like we can be of help, please don’t hesitate to reach out to us at www.friendlyscore.com.