A highlight of this year’s DIGIT FinTech Summit was a panel discussion chaired by Caroline Stevenson, head of FS regulatory at Burness Paull, around the duty of care financial services firms have for vulnerable customers, and the role that artificial intelligence can, and is already beginning to play, in ensuring businesses meet and exceed their responsibilities for customers.

During the discussion, Stevenson announced Burness Paull’s latest report, Vulnerable Customers in the Trust Economy, which highlights AI innovations UK financial service firms have been taking, and the opportunities for fintech companies in the evolving digital landscape—what Burness Paull call the age of the “Trust Economy”.

With the FCA right now gathering information on everything from how firms identify which of their clients are vulnerable, to how they design products and communications to meet client needs, businesses are looking for ways that technology can help them meet regulatory requirements. 

That, according to Kirsty McKenna, innovation programme manager at FinTech Scotland, is an opportunity not just to tighten consumer protections, but for greater innovation in the sector.

“At a very high level the Consumer Duty is putting the onus on the financial services industry to do everything it possibly can to create better outcomes for all consumers,” McKenna says in the report.

“It has opened up lots of avenues for greater use, or more insightful use, of the data those organisations hold and in doing so has created opportunities for AI to be applied and for increased collaborations with new fintech solutions.”

One of those solutions comes from AI developer Inicio, which provides an income and expenditure trained virtual agent, called Budgie, to help customers complete a detailed affordability form by tailoring the form’s typical c.80 fields. 

Inicio’s co-founder and CEO, Rachel Curtis, appeared alongside Caroline Stevenson at the FinTech panel to discuss how AI can help the most vulnerable customers in their journey, and in ways that human agents might not be able to.

Recalling her motivation to develop Budgie, Curtis discussed a particular customer, unable to manage spiralling debt, and feeling helpless when faced with going through monthly finances with an agent.

“She was really embarrassed about the situation she’d gotten into. The only help she could get was a human agent over the phone to go through what’s coming in and everything she was spending money on. She just couldn’t face it, what she felt was going to be judgement,” said Curtis.

In response, Budgie was developed with conversational AI, creating a specially-trained virtual agent that guides consumers through completing income and expenditure forms so that they can self-serve, meeting both their needs and the needs of banks and financial firms.

Also included in the report is fintech business Aveni, which offers tailored solutions via its speech-analysis tool Aveni Detect.

The technology is trained to listen in and flag potential vulnerabilities to call agents. The organisations using it can choose for those vulnerabilities to be be flagged immediately via question prompts to call handlers, or for conversations to be assessed post-call to determine whether a follow-up is required.

Aveni chief client officer, Robbie Homer-Plews who also appeared at FinTech panel, said there is only so much AI can do on its own, adding that while machine learning has evolved hugely in recent years, its potential to create false positives means it should always be used to enhance rather than replace human interactions.

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“AI can be a means of removing people from the equation and that can cut costs, but it’s most effective if it’s used in conjunction with the power of people,” he said in Burness Paull’s report, adding “There’s still a way to go for AI to truly replicate human behaviours and human tendencies.”

The report argues that while AI offers significant potential to enhance the detection and support of vulnerable customers, it needs to be implemented carefully, with organisations considering data protection compliance, and the lawful basis for collecting and processing personal data.

“Best practice is to notify users that their conversation may be monitored or recorded by AI tools and give them the opportunity to object,” said Murray Cree, partner in technology and commercial at Burness Paull.

“Firms will also need to update their privacy notices, and explain the legal basis for processing, what data is being processed, and how the data will be used. Failure to comply with these requirements can lead to enforcement action from the Information Commissioner’s Office (ICO) including significant financial penalties.”