Tackling rising debt with digital technology
UK consumer debt has reached worrying levels.
According to recent figures from The Bank of England, the amount owed on loans and credit cards grew by £1.9bn in March, the highest figure in 11 years.
Debt charities have expressed concern, and with good reason – these debts can easily spiral out of control. Our own research reveals that almost half (46%) of 18-24 year olds worry about their debt and personal financial situations.
Managing your money with digital banking platforms
Here at Intelligent Environments, we’ve found that digital technology is key in addressing this problem. According to our research, almost a quarter (22%) of young people say they would be less likely to go into debt if their bank provided them with better digital money management tools.
Indeed, digital tools can provide banking customers with a clearer view of their finances, thus putting them back in control and potentially making it easier for them to pay off the amounts they owe.
Taking control of debt with the Interact Collect Platform
Our Interact Collect platform is designed with this insight in mind. It aims to help people better manage their debt and to help providers with the collections process. It features devices such as a budget calculator and a variety of payment options and enables people to log on to a personalised portal wherever they are to view and settle their debt on-line on a desktop, mobile or tablet.
The government has also recognised the need for digital tools to help with debt management. The Insolvency Service and the Government Digital Service have collaborated to produce an online tool to help people regain control of their debt. It asks users a series of questions to present them with tailored simple advice.
Financial management apps and tools
Banks also have an important role to play, and several providers have already addressed this with the introduction of financial management apps and tools. For example, earlier this year HSBC launched its “nudge theory” app. This app uses software to analyse customers’ account data and identify spending habit trends in order to send regular and targeted digital “nudges” to make people more aware of their spending.
In fact, our team here at Intelligent Environments has also been developing a tool to make consumers more aware of their spending habits. We have developed the world’s first Internet of Things (IoT) bank account, which links a user’s bank balance to Pavlok, the wearable device that gives users electric shocks to help them break bad habits. If the user goes over a self-set spending limit, they’ll receive a small electric shock. The thinking is that it’s much better to get a little shock now, rather than a nasty one later.
Omni-channel banking and the IoT
Our IoT bank account is just another way of engaging on an important issue – the financial services industry has a responsibility to help banking customers manage their money in the most effective way possible. While these most recent revelations from the Bank of England are deeply concerning, digital technology presents a solution. By presenting consumers with more innovative tools, we can help tackle these rising levels of debt.