The UK’s Financial Capability Lab, a collaboration between the Money Advice Service and the Behavioural Insights Team, today announced a partnership with mobile-only challenger bank, Monzo, to develop new technologies that increase the financial wellbeing and capability of UK consumers.
The Money Advice Service and the Behavioural Insights Team created the Financial Capability Lab to generate and rapidly test new, behaviourally informed ideas to solve some of the most important money challenges facing people in the UK.
Working with public, private and charitable partners, the next step is to develop the most promising of these ideas into field pilots, building the case for new, effective products and services at scale.
Behavioural biases can lead many people to spend more than they have or more than they’ve budgeted. To help people control this ‘discretionary spending’, The Financial Capability Lab suggests:
● Helping consumers to set spending goals - setting goals with clear deadlines mean people are more likely to achieve them
● Letting people know their progress towards those goals - regular feedback on progress can help people keep track of their spending
● And letting them set and remove limits on their spending - setting limits adds friction, which can make people think twice before spending
Monzo will work with the Financial Capability Lab to put these ideas into practice. The aim is to give people more power over the way they use their money, by adding controls they can switch on and off. The new features and improvements could include things like letting customers set and work towards goals, or nominate a trusted person who can be notified and asked to approve certain transactions.
These card controls will build on existing features currently available to Monzo customers, who can already choose to freeze their cards with a tap of a button, or block gambling spending from their accounts.
You can find the Financial Capability Lab’s report and the full list of recommendations here.
The announcement was made during Talk Money Week, a public awareness week designed to reduce the stigma around money and improve people’s money management skills.
Sarah Porretta, UK Financial Capability Director from the Money Advice Service commented: “With over a third (39 per cent) of adults not feeling confident managing their money and an additional 12.9 million people without savings to fall back on, it’s vital that support services and businesses work together to build up the financial capability of consumers.
“We are delighted to launch this initiative during Talk Money Week and help Monzo build on the work they already do to grow the money confidence of their customers. The new initiative will help consumers gain even more control over their savings and budgets by setting short and long-term financial goals. With the huge number of customers now using technology to manage their money, this is a fantastic opportunity to work with Monzo to apply behavioural science learnings from our financial capability lab to help people to make the most of their money.”
Elisabeth Costa, Director of Consumers, Economic Growth and Energy, at the Behavioural Insights Team said: "We are delighted to partner with Monzo and draw on our world-class behavioural insights expertise to inform and build new capabilities that can help Monzo customers and millions of people build their money confidence and manage their money better.
The partnership is a great example of how we can bridge the gap between academia, policy making and business to develop products and technology that can make a real difference to the financial capability of consumers. We hope that other financial services providers take note and look at ways to continuously innovate and evaluate their effectiveness in helping customers."
Stuart McFadden, Head of Financial Difficulties at Monzo, said: “At Monzo, we’re on a mission to make money work for everyone. And that means helping people achieve their financial goals. We’re looking forward to harnessing the skills and experience of the Money Advice Service and the Behavioural Insights team to inform and develop new ideas that will help people manage their money.”
Contributed | what does this mean?