Farrell: Like many people, when I hear the word Finance, I think about billionaire hedge-fund managers, and busy trading floors of global stock exchanges. And if I think for a few seconds longer, maybe I think about my own bank, my home mortgage, my credit card, that sort of thing. But largely, I don’t think much about finance, unless I’m faced with a big purchase. It’s just part of the background hum of everyday life. But this almost casual access to financial tools that many of us have, doesn’t extend to everyone. There are large portions of society living in precarious financial situations that make easy access to these kinds of basic financial tools – that many of us take for granted – difficult at best. Many people just struggle to make ends meet every day. COVID-19 has exacerbated these social disparities, and underlined the need for better support of diverse and underserved communities. In today’s episode, we’ll connect with Auden, a self-described socially responsible financial services company based in Manchester, to hear their take on how they serve financially vulnerable communities. We’ll talk to Victoria Gosling OBE, who, as you’ll hear, had a fascinating journey before becoming the Chief Strategy Officer at Auden, which shaped her interest in socially responsible financial services.
Victoria: I’ve got a rather eclectic background, actually. I did 21 years in the military, culminating as a Group Captain in the Royal Air Force, basically as the base support Commander at the helicopter base here in Oxfordshire, which is not far from where I live. Post that I then went on to help set up what became the Invictus Games, and I then went on to become the Chief Executive of what is the Invictus Games in America.
Farrell: The Invictus Games are an international sporting event for wounded, injured and sick servicemen and -women, both serving and veterans. The Games use the power of sport to inspire recovery, support rehabilitation, and generate a wider understanding and respect of all those who serve in the military.
Victoria: Alongside Auden, I am a member of the British Olympic Association Board, and I hold another executive position which is the Chief Executive of both Paralympic and Olympic Snow sports.
Farrell: These previous experiences, in particular working with the wounded, injured and sick for the Invictus Games, fueled Vicki’s commitment to support the underserved.
Victoria: A lot of them had been forgotten about, and had been excluded, were struggling with housing and benefits and employment. You live a life there and you kind of live in a bubble. And when the bubble bursts, or something happens actually, what’s the next step, where do you turn to? And I found, by telling their stories and actually showcasing these inspirational individuals and what they were capable of, we were able to then create a very strong brand with Invictus, and really help people who’d been struggling with mental health.
Farrell: Now, Vicki brings that experience into Auden, helping people to build what she calls financial resilience.
Victoria: With finances, we know, in order to create financial capability and resilience – which is really important, which therefore has a positive impact on your mental health – if you can make these improvements, it’s not a sprint, it’s a marathon. It takes time, and it takes small changes as you progress through that period of time. So, bringing people in, for example, Invictus, where they suffered a loss – be of limbs or mental health – is slowly but surely building them back up to have belief and to understand what opportunities were out there for them. I think by supporting some of our customer base through understanding them better and being able to provide them with the right products and services, that help to bring that and build that financial capability and that resilience will be really, really important.
Farrell: So, what is Auden all about? What does it mean to be a socially responsible financial services company?
Victoria: Auden’s mission is to support and help to create a more financially inclusive Britain.
Farrell: A more financially inclusive Britain, as she describes it, could mean a lot of things. But to make it more tangible, Auden’s first service is a short-term loan. Traditional pay-day loans can sometimes be exploitative, making difficult financial situations dire. Auden aims to offer something better. On top of this, Auden does not want to let down those who aren’t eligible for a loan and actively refers those customers to independent experts who will offer financial or debt advice.
Victoria: It’s about having customer centricity, really feeling that you’re not judged when you come to Auden. Nobody is there to judge you, but we will understand what your personal situation is so that we can support and point you in that if we can’t help you directly with product, then actually what we need to be doing, is pointing you in the right direction where you can get that help and support, and I think that’s really really important. We’re very much bottom-up listening; we are literally building this business through some of the insights and learnings that we’re gaining and gathering from the customers. From the customers that use these products. From the customers that are from the demographic that have found themselves underserved or overcharged. We’re taking the learnings and we’re building the business from a bottom-up approach, whereby we’re showing the empathy, we’re showing the understanding, and we’re making sure that our products and services are fit for purpose. And I think it’s a very customer-focused and customer-led way of operating. And I think that’s fairly unique.
Farrell: Next, we spoke to Sophie Jenkins-Anderson.
Sophie: My name is Sophie, and I’m at Auden as the Research And Experiments Lead.
Farrell: Sophie talked to us more on how exactly Auden uses research to connect and collaborate with its audience, with the bottom-up approach.
Sophie: We actually started this with a primary piece of research that we called internally ‘customer closeness’. It was basically a reset button for us, an opportunity to start with a Tabula Rasa – so a clean slate in Latin. And really get to understand the audience: who they are, what’s important to them, their background, their life experiences, their financial situation. It brought the audience to life for us, for the first time, really. Because up to then, everything that we knew or had read about this audience was based on large-scale quant studies, so very robust, it gave us great stats and it helped us build our business; but it lacked in the richness and the depth that we felt we needed to really understand who we’re going to be serving and also their needs. And from this work, we actually identified four key personas. And they were personas among users of high-cost short-term credit, which we then went on to build into our online community. So, our online community is called ‘Let’s Talk Money’. It’s a panel of respondents that have either used short-term loans in the last year, 18 months, or they’re open to using it – so they told us should there be a need for them to access credit, they would be open to using a short-term loan.
Farrell: Through the ‘Let’s Talk Money’ community, the Auden team learns from real-life customer experiences, which allows them to improve their offering and support the financial health and well-being of more people.
Sophie: One of the things that we identified very early on is that there’s a clear shift in thinking and decision making for this audience. So, when they’re thinking about the situation they’re in, and that urgent need for money, they’re very much in a system-1 way of thinking. They need the money now, they need it quickly. But once they’re actually accepted or declined for that piece of credit they’re applying for, their thinking then changes very quickly to system-2 thinking, where they start to rationalize what they’ve actually been through, whether they’re accepted or whether they were declined. For the accepted, they start to worry about whether or not they’re going to be able to make the payments. And the declined, they’re still left in the same situation that they were in before they applied for the credit, they still don’t have access to finance. Something that we identified very early on was this change from system-1 to system-2 thinking. And for us, how we’re tackling that with our products and services is around positive friction. So how can we build the right level of friction into an application journey that doesn’t make it difficult for the customer to complete the application process, but builds in enough that they are thinking about what they’re doing, is it the right decision for them, are they understanding the product that they’re taken out?
Farrell: But the application procedure is just one part of the journey. Understanding how consumers experience being declined, is another important theme for Auden.
Sophie: Another key finding that we’ve identified – it’s very important to us all at Auden – is around the decline experience. What customers tell us, is that when they get to that decline experience, they’re feeling very used. So, they’ve given all the data and all the information that a lender needs to make a decision. And then they get a ‘computer says no’, and that’s the end of the relationship. And they’re left feeling quite used. It’s a one-way situation where they’ve giving everything to the provider and getting nothing back. So that’s been a key finding for us, and it’s influenced a lot of our thinking and where we want to take our products and services; how do we build a decline experience that supports the customer?
Farrell: Connecting with people on such a sensitive topic is not without its challenges.
Sophie: There’s a tendency for this audience to feel embarrassed, to feel a bit shy to talk about their financial situation. And what the community has done for us is given us that opportunity to start a relationship. All be it that the people that we’re speaking to aren’t Auden customers now, they may end up being Auden customers in the future. But it’s given us an opportunity to build up that relationship, so that they do feel that they can trust us and that they can talk confidently to us about their feelings, their experiences in that market. There’s no mention of Auden on ‘Let’s Talk Money’, which we think is essential in building the credibility of our research, but also keeping it anonymous in terms of the feedback that they’re providing.
Farrell: The COVID-19 pandemic is having a tremendous impact on everyday life, not in the least on the lives of those that are financially vulnerable. Stats from the FCA show that in the UK, 20 million people were financially worse off in 2020 than pre-pandemic, with 38% of adults struggling to make ends meet. To better understand what this meant for its audience, Auden examined Britain’s deepening financial exclusion, resulting in the ‘Pandemic Penalty’ report. It reveals that those already struggling financially have been hit with an additional penalty as a result of COVID-19.
Sophie: The main finding of the research is that there’s been sort of one lockdown for those who do have access to savings and accessible sources of credit, but a completely different experience for those excluded from mainstream finance. And what we found is that this audience is actually often penalized due to not having savings. So, for example, when there was a job cut, when furlough happened, and they don’t have any savings to rely on, that safety net of savings that other people have, they don’t actually have that. And that’s what we refer to as the pandemic penalty.
Farrell: Another key finding was around younger key groups.
Sophie: One of the main findings that we identified was that a quarter of the respondents that we spoke to were declined from credit in the last three months, and these were more likely to be 18-to-30-year-olds. But we actually also found that the audience most likely to be applying for credit was also 18-to-30-year-olds. So, we think about that for a second. The consumers that are relying on credit the most, the people that are applying for it the most, are the same audience that are being declined the most. And that was quite a big finding for us and how we again – I’ve talked about the decline experience earlier – how can we support this audience in that place?
Farrell: The research found that just under 50% have less than £100 pounds in savings. And a third of single parents are relying on foodbanks. The report is not only impactful for Auden, but also got picked up in the UK parliament, as Paul Maynard, a Conservative Party politician, mentioned some of the key findings in a debate around household debt in the context of COVID-19. Yet, Auden realized the importance of working with other key stakeholders in the sector to make change happen. Back to Victoria, on involving others.
Victoria: I’m very much focused on the stakeholder engagement with our customer base, but also with external stakeholders who have done so much work in this space, that understand it really well. So, whether it’s money and mental health or Money Advice Service or whether it’s Fair Finance and many other players that are here. We need to learn from those that have been in this space a lot longer than us, and have done a lot of research. I think if we work together with those that really care in the membership of responsible finance, then the water will rise for everybody. Because I do think there’s an opportunity for those people who are looking at financial inclusion to come together and really focus in on how we can do this. Because it is tricky, but how can we do it better, how can we work with the FCA and other stakeholders?
Farrell: So, what does the future hold for Auden?
Victoria: One of the questions is: where are we heading? What are we looking at? Well, the way that we see it is as the whole individual. So, if we can’t lend to you, the decline journey is going to be really important. So, if we can’t lend to you because we can see that it’s actually going to not be responsible as it’s going make your situation worse, then what can we do to give you something positive to take away? And we’re doing a lot of focus around that, in terms of products and services and partnerships, so that the experience that you have when you come to Auden is a positive one, rather than feeling that you’re not in a great place. You don’t come to Auden for some support and you have to walk away with nothing. We need to constantly looking and through research finding out what products and services are going to help in addition to, obviously, the loans which we hope are formulated in a way that they can improve the capability at the same time as supporting resilience.
Farrell: Research has helped shape how Auden understands the communities it is serving. Not only current customers, but those who might be future customers, or even those who might just need advice. They are demonstrating that it is possible for a financial institution to have empathy, and to be socially responsible about catering to the underserved people in our communities.
This episode was written and produced by Sarah Van Oerle, with assistance from me, Farrell Styers. I’m also responsible for mixing and tech production. We had additional support on this episode from Katia Pallini and Bri McIntosch. A big thanks to Victoria Gosling OBE and Sophie Jenkins-Anderson for sharing their time. And as always, thank you, for listening.
If you want to find out more about InSites Consulting and our work, just go to insites-consulting.com/podcasts, or subscribe to our podcast on Soundcloud or Spotify.