The FCA has today confirmed that it is introducing measures in an attempt to fix a ‘dysfunctional’ overdraft market. In 2017 firms made over £2.4 billion from overdraft fees alone, with approximately 30% being from unarranged overdrafts. More than 50% of unarranged overdraft fees came from just 1.5% of customers in 2016 with people living in deprived areas cited as being much more likely to be impacted by these fees.
Of particular interest to Maximise IT is the requirement for banks and building societies to do more to identify customers who are showing signs of financial strain or are in financial difficulty, and develop and implement a strategy to reduce repeat overdraft use.
This, along with the general sentiment of the reform, demonstrates an ongoing trend that banks need to do more to improve the customer experience, offering more transparency and fairness to customers. Set against the threat of losing £2.4 billion of revenue, banks face an ongoing struggle to ‘keep the lights on’ in their IT estates whilst also delivering on digital transformation initiatives to improve the experience of their customers.
We’ve had a great deal of experience helping banks make this transition, and have been involved in addressing some of the underlying challenges which are not trivial. However, the message from the FCA today is further evidence of them delivering on their strategic objective to secure an appropriate degree of protection for customers, and highlights the need for banks to continue on their digital transformation journeys, for the benefit of their customers.
You can read more about the FCA’s announcement at https://www.fca.org.uk/