Delivering on purpose: How can banks best support customers experiencing vulnerability?

From women seeking to escape family violence to people struggling with substance abuse, many people experiencing vulnerability are looking for empathy and support from their bank.

While many banks have made significant strides toward supporting customers experiencing vulnerability, we observe that these efforts are sometimes disconnected and that levels of sophistication across the banking sector are highly variable.

Banks are under pressure to act from several sources: customers are keen to know they will be safe if they experience vulnerability, bank employees want to know their organisation is doing the right thing, and governments want to protect people from exploitation.

As the Australian Securities and Investments Commission recently signalled, it expects banks to do more when it comes to supporting customers experiencing financial hardship.

So banks need to develop programs to support customers experiencing vulnerability in a way that aligns with their strategy and does not have an adverse commercial impact.

We are pleased to share some of our thinking as consultants focused on financial services (Tony) and human services (Trish). Our deep work in human services and our track record in financial services gives us visibility of the structural challenges for customers experiencing vulnerability and the role of banks. Together we can identify what more can and should be done to make a real difference.

Drawing on our combined experience, in this article we present the five key questions we think banks need to consider when supporting customers experiencing vulnerability and give some guidance in how they might approach the complex issues involved.

Clearly a direct driver of action needs to be the benefits of the action itself – to help customers experiencing vulnerability. Without this driver being front of mind, initiatives will lack sincerity and ultimately fail.

But beyond this, there are several other potential drivers:

• Managing risk. By providing supports to customers experiencing vulnerability, banks can manage the risk that these customers enter financial difficulties. They also manage the possibility that a bank’s activities regarding a vulnerable customer become a reputational risk.
• Meeting public and government expectations. Public discussion on vulnerable people often centres on the supports that organisations including banks can provide. Many people expect that banks will offer suitable supports for themselves and others, while governments will be watchful about the need for regulatory interventions.
• Meeting the expectations of employees. Bank employees want to be able to do their job confident in the knowledge the bank they work for has got the back of customers experiencing vulnerability. This can also create a more pleasant work environment by avoiding the friction that can otherwise arise in banks’ dealings with people experiencing vulnerability.
• Upholding the bank’s purpose and ESG objectives. As purpose-driven organisations, many banks seek to make a positive impact on the world. The practical impact of the purpose will be felt in how a bank serves people experiencing vulnerability.

Different drivers for action will prompt different approaches, so it is valuable to interrogate this. Whatever the driver, banks need to keep in mind commercial objectives, broadly defined.

It is helpful for banks to understand what problem they are seeking to solve and therefore what role they can play in the solution.

Banks need to consider the ecosystem of services connecting with vulnerable cohorts – including governments and community organisations – when thinking about their role. Operating in isolation can cause its own complications.

Many government and not-for-profit organisations argue that supporting vulnerable people is a society-wide challenge. What can the private sector and bigger institutions do to make the world better and fairer, particularly for people who are most vulnerable?

We know banks perform three vital functions – transacting, lending and saving. Each function can impact vulnerable populations and provide opportunities for support, including enabling people to improve their circumstances.

There is also a place for banks building financial literacy among their customers in order to improve overall wellbeing. They are well placed to enhance community access to relevant information.

Banks have the potential to be a source of stability in a customer’s life. By maintaining an ongoing relationship with a customer, a bank can support them before, during and after periods of vulnerability.

It is helpful to start with the people impacted. Human-centred design can help banks gain insight into the experiences and needs of people experiencing vulnerability and how different programs connect.

One common approach is safety by design, which can ensure the needs of vulnerable cohorts are considered from the start.

Banks need to consider how they can bring together several parts of their organisation – such as customer service, branches and legal – in support of a strategy, to avoid the risk of compartmentalisation.

Banks have access to a deep trove of data, so need to consider how that can enable their strategy, while being mindful of privacy and security.

It is important to consider intersectionality – the impact of multiple overlapping forms of vulnerability that may evolve. A personalised approach can help to identify and respond to multiple vulnerabilities.

A set-and-forget mindset is unhelpful. Instead, program designers should consider their evaluation approach from the start and be willing to make iterative change in response to evaluation evidence.

It is worth considering what existing measures are available before seeking to create new ones.

Recently the Treasury released Measuring What Matters, Australia’s first national wellbeing framework. The framework makes the case for understanding whether investments are improving the lives of Australians.

As the Treasury explains:

The Framework’s usefulness will extend beyond government. It has been specifically designed to be drawn upon by business, academia, and the community to support their efforts to create better lives for all Australians.

This offers a strong foundation for banks to measure the impact of their initiatives.

Whatever the source, banks need to consider what data points they need to evaluate performance. Evaluation of social-impact activities requires a fundamentally different approach to evaluation of commercial activities.

Along the way you need to be alert to unintended consequences, in which you might inadvertently be causing harm.

There is value in identifying what impact you are seeking to have on users of a program. Setting clear objectives, reflected in measurable targets, allow banks to better coordinate their efforts.

Interventions need to be considered not just at a point in time but across the length of a person’s period experiencing vulnerability. These can sometimes be years-long or even life-long. These long relationships position banks to be proactive in anticipating these challenges.

We should be cautious about making assumptions about people’s preferences. It is worth thinking more deeply about what matters to Australians, and therefore what role banks play.

There is a strong imperative for action, so banks need to be proactive in setting up the right structures to make progress.

Supports for people experiencing vulnerability represent a valuable opportunity for banks to demonstrate their commitment to improving the communities in which they operate.

The opportunity is there for banks willing to grasp it. These five questions can help guide the discussion.

Get in touch to explore how we can support you better support people experiencing vulnerability.

Connect with Tony Fiddes and Trish Woolley on LinkedIn.

Prepared with input from Monique Jackson, Darren Nguyen, Hugo Fuller, Marianna Brungs and Sarah Jones, and Paurush Singh during his time as a Director at Nous Group.