The UK’s Financial Conduct Authority just completed research into what helps consumers better manage their current accounts and avoid unintended overdrafts. The answer will come as no surprise to FICO clients who use our mobile communication services.
As shown in a handy infographic, annual summaries of costs and activity don’t help at all. Even when the bank puts it in black and white, this doesn’t help people avoid unarranged credit fees or even provide the impetus to switch banks if the costs are too high.
What does work? SMS alerts and mobile banking messages. The FCA found that these resulted in a 24% reduction in unarranged overdraft charges.
Surely this is a win, win, win: better customer service, at a lower cost, that drives the right kind of behavior. Oh, and the regulators approve!
For FICO’s own research on this topic, see our Insights white paper on How Mobile Communications Can Improve Collections.