Revolutionising how banks identify and support vulnerable customers

Background

Serene is a fintech company that aims to integrate advanced technology, scientific expertise, and a deep understanding of human vulnerabilities, to create a serene financial experience. They aim to revolutionise how banks identify and support their vulnerable customers through reshaping the industry and fostering long-term consumer financial wellbeing.

The company was born from CEO Savannah Price’s personal experience supporting her sister through mental health challenges where it became apparent that irregularities in financial behaviour signalled deeper issues and complexities related to mental health issues.

Savannah recognised the need for a solution that could help financial institutions identify and support customers grappling with the more “invisible” vulnerabilities like poor mental health and changes in life circumstances.

The Journey

Interface initially supported Serene with a student project with the University of Aberdeen focussing on the correlation between spending behaviour and mental health. Interface then linked them into the TSB Labs accelerator programme, this helped them refine and test their value propositions to solve strategic TSB opportunities. It gave them a chance to work with business sponsors, pitch their propositions to senior leaders, run a proof of concept and launch their proposition with TSB customers.

Interface was tasked by Serene to identify academics that could help create a first-of-its-kind Machine Learning-enabled early identification system for poor mental health & financial vulnerability. This would develop further thinking and provide evidence around the linking of poor mental and financial health through accessing and analysing synthetic, open banking and health data.

Interface linked Serene with Dr Marcel Lukas from the University of St Andrews who brought significant expertise in financial wellbeing, data analysis, and experience working with fintech start-ups to this project, especially his research into budgeting and expense prediction using open banking data. Similarly, the project analysed synthetic and real consumer transaction data provided by Smart Data Foundry and the Serene Community. The collaboration was funded by the Interface-led Inward Investment Catalyst Fund.*

* The Scottish Inward Investment Catalyst Fund launched by Interface and the Scottish Government promotes Scotland as a leading destination for inward investment and supports businesses not yet located in Scotland but seeking to establish stronger ties with academia here. As well as funding research and development it provides an opportunity for the company to establish relationships and give insight into other aspects of the Scottish landscape, such as further investment opportunities, supply chains and the skills base to strengthen the case for investing in Scotland.

The Challenge

The Financial Conduct Authority (FCA) defines a vulnerable customer to be someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care. According to FCA, more than half (53%) of adults in the UK display indications of potential vulnerability, yet service providers only recognise a mere 3% of these cases (FCA,2023). Since 2020, the FCA has issued circa £2 billion in fines for firms’ mistreatment of vulnerable customers that were not identified. To safeguard potentially vulnerable consumers effectively, consumer finance firms must identify such individuals and obtain a comprehensive understanding of their circumstances in real time which remains a critical challenge for financial firms that currently lack effective and inclusive tools to identify and support their vulnerable customers. This is especially pertinent with the FCA’s new consumer duty rolled out in June 2023, where financial firms face increasing regulatory pressure to do right by their vulnerable customers. Without the correct tools to do so, they are at risk of huge financial and reputational damage.

The Solution

In response to this, Serene is developing a proprietary tool to facilitate better identification of vulnerable customers through a suite of machine learning algorithms. It aims to empower financial firms to offer personalised interventions based on consumers unique needs and circumstances. Unlike existing solutions, Serene’s analytics function continuously, and in real-time – a core differentiator, as well as taking a more proactive and predictive approach. By combining financial and mental health insights, Serene will revolutionise how banks identify and support their vulnerable customers, reshaping the industry and fostering long-term consumer financial wellbeing. The project focuses on the identification of financial ‘biomarkers’ indicative of mental health vulnerabilities. In addition, the output of this project will inform the opportunities and challenges in developing financial data-driven interventions to support vulnerable consumers.

Dr Lukas and his team at St Andrews University applied theoretical frameworks from his academic research on financial behaviour analysis to develop novel approaches for vulnerability detection. His expertise in analysing open banking data patterns, developed through years of academic research, was instrumental in enabling Serene to identify key vulnerability areas under the three FCA defined categories of Health, Life Events & Financial Resilience and created a framework to understand the financial nature of each vulnerability. They went on to develop a Vulnerability Impact Analysis Framework to create a relationship model between vulnerabilities and financial behaviours, developed the Serene Score and a secure web portal to upload and analyse real financial data leading to the development of algorithms and software for analysis proving Serene’s concept and resulting in an evidence-based vulnerability identification model.

The Benefits

Company Benefits

• The insights and methodologies gained from this project have equipped Serene with a solid foundation to build their models and introduce them to the market with greater confidence.
• Proved the concept for developing financial data-driven interventions to support vulnerable consumers.
• The outcomes of this project will help Serene attract and invest in top talent, unlock access to anonymised real longitudinal financial data and in turn develop a cutting-edge solution and gain a competitive edge in the market.
• Without Inward Investment Catalyst Funding Serene would not have had the resources to secure Dr Lukas’s time and leverage his extensive experience and expertise.
• The project demonstrates successful knowledge transfer from academic research to industrial application, particularly in translating theoretical understanding of financial behaviour patterns into practical vulnerability detection tools

Academic Benefits

• The collaboration with Serene has provided valuable real-world validation of theoretical frameworks developed through academic research. Dr Lukas’s research into financial vulnerability detection has been enriched by insights from this industrial application, leading to new research directions in behavioural finance and financial technology.
• The project has also strengthened the University of St Andrews’ position as a leader in applying financial research to solve pressing societal challenges.

The Next Steps

• Serene aim to implement the results of this project by developing an Application Programming Interface (API) that will be accessible to financial institutions.
• Through this API, customer accounts at these institutions will be analysed by the Serene solution and will provide indications if any vulnerabilities are detected in the customer accounts analysed.
• Using the API, financial institutions can integrate it into their systems and proactively identify potential vulnerabilities or risks associated with their customers’ accounts. This will enable them to take appropriate actions to mitigate risks and safeguard their customers’ financial well-being.
• Explore further opportunities for collaboration with Dr Marcel Lukas
• Advance Serene’s analytics capabilities.