Fuse, an AI-powered transaction analytics firm, has taken the initiative to offer support to banks and financial institutions in response to lenders admitting their lack of preparedness for the impending regulatory changes.
In light of the upcoming Consumer Duty, Fuse has unveiled Health Signals, designed to assist risk and compliance teams in measuring financial vulnerability, predicting arrears risk, and monitoring the impact of financial products on customers.
The Financial Conduct Authority (FCA) will enforce the Consumer Duty from the end of July 2023, mandating firms to not only deliver good customer outcomes but also to actively understand and provide evidence of meeting those outcomes. Additionally, it aims to ensure fair treatment for vulnerable customers.
With over three-quarters (77 per cent) of lenders considering the new rules as a positive step towards improving borrower outcomes, Health Signals aims to support financial institutions in complying with the regulation and monitoring the impact of their financial products on consumers.
According to a recent Opinium research study of 100 UK lenders, more than half (55 per cent) of lenders openly admitted their lack of preparedness for the upcoming regulation. Additionally, six in 10 (61 per cent) lenders anticipate the need to seek third-party support and guidance.
Health Signals harnesses the power of AI and automation to offer vulnerability monitoring. By analysing customer transaction data, obtained through open banking or existing transaction records, the platform also empowers institutions with proactive insights to monitor, report, and predict financial vulnerability. This capability is crucial in ensuring the fair treatment of vulnerable customers and offering rapid support to those at risk of falling into arrears.
Recent trends underscore the urgency of effective vulnerability detection and support. Approximately one-third of lenders (32 per cent) have observed an increase in customers defaulting on payments over the past year, while a similar proportion (29 per cent) report an uptick in the number of borrowers seeking support. Health Signals prioritises those most in need of intervention.
Fuse is actively collaborating with high-street banks to implement the Health Signals solution in preparation for the regulatory deadline.
Sho Sugihara, CEO and co-founder of Fuse, said: “The Consumer Duty stands to be a powerful catalyst to kickstart this change, and it’s essential that banks and other financial institutions are well supported with the technology and expertise needed to adapt successfully to the new regulations.
“Health Signals offers unique insights into consumer vulnerability, providing firms with the tools needed to better understand their customers and boost consumer protection. We’ve developed Health Signals in collaboration with some of the UK’s most recognisable banks, ensuring the platform proactively monitors the impact of financial products.”