Calling All Banks: Personalisation Is Crucial to Meeting the UK’s New Consumer Duty Mandate

New rules coming into full effect this July will require UK banks to make efforts toward delivering “good outcomes for retail customers,” and they’ll soon have to prove they’re supporting sound financial decision-making to stay in compliance. It’s true that some banks will view the new mandate as a costly setback, but it also presents them with an opportunity to have their cake and eat it, too—if they’re willing to embrace cross-channel personalisation.

It’s been known for years that consumers, not just regulators, expect individualised support and advice from their banks across all digital touchpoints. They often reward the banks that deliver these tailored experiences with their loyalty. In fact, over 8 in 10 of financial institutions (FIs) acknowledge that personalisation is a clear, visible priority for their companies. Even so, some have been treating it as a nice-to-have, rather than allocating enough resources to successfully implement it on a large scale.  But now that the new mandate is taking effect, personalisation isn’t just a means of crafting a topflight customer experience; it’s a matter of regulatory compliance.

That’s because personalisation’s real-time, adaptive capabilities can be leveraged to protect consumers from financial missteps, and create relevant, context-aware experiences that better support them. Traditional banks sit on a veritable treasure trove of data that, when driven with the right tools (and proper consent mechanisms), could enable scenarios in which potentially risky transactions are detected, responsible financial advice is served, or support is offered in moments of need via in-app and mobile channels. And all of this could take place without a single customer service call or brick-and-mortar consultation.

Here are a few ways personalisation can help UK banks support the financial wellbeing of their customers:

Keep Travelers Informed While Abroad

Let’s imagine that Dana, one of your loyal account holders, is traveling from London to Barcelona on summer vacation, and upon arriving, meets up with some friends for dinner. After a few drinks and a pleasant four-course meal, the waiter brings the check and asks her if she would rather pay in GBP or Euros via her credit card. Naturally, her inclination may be GBP: She lives in London; her bank is based in London; and this might avoid a few exchange rate snafus. Unfortunately, she’s mistaken. In fact, if Dana pays in any other currency abroad, it often must be converted twice (through a process known as double currency conversion). When those additional fees compound over time, her vacation may end sooner than planned.

Now picture this scenario: Dana opts into helpful notifications from her bank, which leverage location and purchase data to alert her of important information in situations that could otherwise lead to a financial misstep. When she lands in Barcelona, she then receives a push notification alerting her that when she’s in the European Union, paying with the local currency is typically best. Suddenly, she’s spending like a pro. This is personalisation for Consumer Duty in action.

Personalised push notifications can also help save vacationers money by highlighting travel-related offers that line up with their previous purchase history. Envision this scenario: a customer has just locked down a flight to Greece using their travel card—but has yet to book accommodations or make preparations. Banks can remind that customer of any unused benefits and offers, including access to airport lounges, discounted travel insurance, and exchange rate offers, which may lead to a significantly lower bill by the end of the trip. The end result: a boost in reputation for the bank, and a win for the consumer.

Help Avoid Overdrafts

The FCA has had overdraft fees in their crosshairs since last year, and banks should prepare to be scrutinised when it comes to high interest charges and undermanaging repeated overdraft use. Helping customers avoid fees via personalisation is a way to signal to regulators that they’re serious about the mandate. Even better, it can foster trust and brand loyalty with customers.

Let’s say a long-time bank patron—we’ll call him Omar—routinely has an account balance under £100 for several days a month around the same time that certain bills are due. What’s more, he recently over-drafted his account. Using personalisation, his bank can deliver rich, text-based messaging and notifications reminding him to transfer funds from savings and prevent additional over-drafting.

Alerts like the one above have a substantial impact on consumer behaviour, with a recent report showing that timely text messages alerting customers their accounts were about to be overdrawn or had insufficient funds led to large savings—up to 25% in some cases.

But for some customers, an overdraft is inevitable. To foster better financial decisions, banks might also consider using the same personalisation channels to inform users when their transactions have been declined due to insufficient funds. And with the right spending data, any bank can craft bespoke financial service recommendations involving different spending categories, e.g., “Have you considered dialing back your entertainment budget this month?” Banks can go a step further, linking back to their owned content channels, sharing educational articles on how to build up savings and spend smarter.

Offer Scam Warnings

Personalisation offers several ways to communicate with consumers who may be at financial risk. For example, bank customers can receive personalised engagements, including in-app warnings and push notifications regarding potential scams, as well as personalised advice on how to avoid common scams based on their location. In addition, banks can give customers the option to contact a local branch and report suspicious activity.

Imagine another bank customer, Anika, is on vacation in Athens, where there have been reports over the last few months of scammers impersonating close friends and making urgent requests for large bank transfers. Between a tight itinerary and the process of navigating a new culture, she has barely had time to learn enough of the language, let alone research potential scams in the area. But because her bank can deliver personalised alerts about common scams down to a hyper-local level, she can focus on enjoying her vacation carefree, knowing that her bank has her back.

Now Is the Time for Banks to Jumpstart Their Personalisation Initiatives

By embracing the impending new regulations, banks can take a proactive approach with personalisation. Modern-day personalisation technology allows banks to easily transform fragmented touchpoints into a seamless customer experience, support a broad array of channels, and hone in on specific FI business requirements—all while keeping data privacy top of mind. By prioritising personalisation, they’ll not only position themselves well to weather the UK financial industry’s forthcoming regulatory shift, but bolster customer loyalty, trust, and engagement.