Financial services firms could be overlooking commercial opportunities by treating customer vulnerability mainly as a compliance requirement, according to MorganAsh.

The support services provider said the introduction of Consumer Duty in 2023 had increased the focus on identifying and supporting customers in vulnerable circumstances, but argued that firms should also consider the wider business value of understanding those customers more effectively.

MorganAsh said better information on vulnerability could help firms make more informed decisions, improve product and service personalisation and engage with customers before their circumstances deteriorate.

It cited Money Advice Trust figures putting the annual household spending power of the UK’s 16 million disabled people at £446 billion. It also said 75% of disabled consumers believe businesses are losing out because of poor accessibility.

Andrew Gething (pictured), managing director of MorganAsh, said: “We’ve long said that the focus of Consumer Duty and customer vulnerability should be on the carrot and not just the stick. All too often the narrative is around what happens if you don’t, rather than the considerable business benefits of why you should.

“Of course, firms do need to meet the requirements of Consumer Duty, but that is only one part of the picture. There are significant commercial opportunities and clear competitive advantages in understanding customers properly – and using your insights to make better decisions.

“Whether that means avoiding an unnecessary decline and pivoting to a different product, retaining a customer who might otherwise leave or identifying a need for a new product, better vulnerability data can give firms a much clearer picture of the people they are serving and create real opportunities for greater personalisation.”

MorganAsh also pointed to McKinsey research suggesting personalisation can deliver a revenue uplift of around 40%, while other research has identified poor personalisation as a factor in customers switching providers.

The company said the potential benefits extend beyond mainstream financial services into areas including debt and credit, insurance, utilities and wealth management.

WEBINAR TO EXAMINE COMMERCIAL CASE

MorganAsh plans to explore the issue further in an industry webinar, including a case study showing how vulnerability assessment contributed to fewer automatic declines, more approvals and the development of a new product.

The session will also consider recent FCA enforcement activity, the potential revenue benefits of better customer data and the use of digital vulnerability management across different sectors.

It will also examine the potential for sharing structured vulnerability data, reducing the need for customers to repeatedly explain their circumstances.

Gething added: “Through the combination of technology being readily available and fantastic guidance – particularly from the likes of the Chartered Insurance Institute (CII), customer vulnerability management doesn’t need to be the burden that firms think it is.

“If a firm can proactively identify a customer’s circumstances, understand them properly and use that information appropriately, they have the ability to improve customer outcomes, while making better commercial decisions too. That is a far more valuable proposition than viewing vulnerability as just a compliance cost.”