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How does fintech help families maximise their income?

We believe that benefits checks and calculations should be a feature in wider financial propositions. We wrote this article on Citywire sharing how our partners are using our platform to help their customers find additional income of £5,300 per year.

Problem and opportunity

Turn2Us, a national poverty charity, estimates that seven million people across the UK are missing out on over £15 billion of unclaimed benefits because many people do not realise they are eligible or wrongly assume they are not entitled.

In our opinion, the key to making sure that people get their benefits is to offer context-specific and personalised notifications in the banking journeys they are already using. For example, we have seen benefits application rates increase by 10x when adding personalised notifications with the extra benefits that customers might be entitled to.

We are collaborating with a wide array of fintech companies to help people in the UK uncover all the support available to them, which can range from means-tested benefits to emergency grants and social tariffs. This support helps people to maximise their income, reduce their monthly bills and build their financial resilience.

Financial well-being in the workplace

PayCaptain – payroll software and mobile app which offers dynamic and interactive payslips where employees can get visibility of their income, taxes, pension contributions and can also check their benefits entitlement in the app.

Simon Bocca, CEO of PayCaptain, “Companies have a responsibility for paying fairly, paying accurately and on time – but they should also support their employees with clear information about their pay and tools and guidance to help them manage their money well. Employees with poor numeracy and poor financial health can benefit from these features helping companies to improve productivity and staff retention”.

PayCaptain’s solution includes functionality which is specifically designed for people who wrongly assume that they are not entitled to benefits because they are in employment, which according to Welfare at a Social Distance (a national research project funded by the Economic and Social Research Council) accounts for 40% of the amount of the unclaimed benefits.

Salary advance

Another company that uses personalised and context-specific alerts is FastP.A.Y.E, an app that gives staff the ability to access their earned wage before the next pay cycle. When employees are requesting a salary advance, the app reminds them about the potential benefits they might be entitled to, and if they request a salary advance often, the app signposts them to specialised money advice services, including debt advice.

Ian Hogg, CEO of FastP.A.Y.E, highlights the importance of putting customers’ best outcomes before commercial goals. “We recognise that a salary advance isn’t always the best option. Some may have outstanding benefits entitlement and in such circumstances, we guide employees to these benefits and avoid the need for an advance.”

Borrowing and debt refinancing

Scotcash and Salad Money, two community lenders specialising in helping financially vulnerable people build their financial resilience, are using borrowers’ information to estimate the extra amount of benefits they might be entitled to.

Scotcash and Salad have helped over 30,000 borrowers find extra benefits of £5,300 per borrower or 160mn in total extra income for vulnerable people. Theodora Hadjimichael, Chief Executive of Responsible Finance, calls attention to the impact of this extra source of income. “Lower-income households now have millions of pounds in their pockets they wouldn’t otherwise, a lifeline with such huge increases in the cost of living”.

Sharon MacPherson, CEO of Scotcash, also recognises the importance of making people aware that they might be better off by switching from tax credits to Universal Credit. “One of the most frequently underclaimed benefits is Universal Credit. I know many of our customers are worried that moving from legacy benefits to Universal Credit will mean they have less in their pockets, but in fact, on some occasions, the reverse is true. For example, one Scotcash applicant who was working, claiming Working Tax Credit and renting privately found their benefit had almost doubled when they claimed Universal Credit.”

You can listen to the Money Box show on BBC Radio 4 where a customer shared how the benefits check helped him to find out benefits he “had no idea it actually existed, which work out to be extra 200 pounds per month”. You can listen here from the minute 9:45.

Debt problems

Sadly, in many cases, people simply struggle to manage their borrowings by themselves and are often too late in actively reaching out to their creditors. But there is still help and support available from professional debt advice firms that can set up a solution with their creditors, ranging from debt renegotiation and scheduled repayment plans to personal bankruptcy.

Cerebreon, a specialist software and analytics platform for the debt advice and recovery industry, has embedded a benefits check for customers when they complete their Income and Expenditure assessment on the platform, which has to be done as part of all debt negotiation processes. The technology enables customers and advisers to easily optimise income and benefit entitlements and set a stable budget to help them navigate their debt repayment plan.

Kenneth Doherty, CTO of Cerebreon, highlights the benefits of their pioneering Early Warning System which triggers proactive intervention before a financial crisis event occurs and enables course correction, “we ensure the best journey for the most vulnerable people living with problem debt, ultimately helping them to rehabilitate from the root causes of their money problems. Debt is personal and so the treatment strategy should also be”.

Kenneth emphasised the need for regular assessments of people’s financial situation to ensure they continue to optimise their budget, as circumstances can change frequently, and get their finances back on track, “the cumulative impact of the small gains and savings at each step of the process makes all the difference for an individual recovering from problem debt. Cerebreon makes this happen and promotes dignity and empowerment in debt resolution”.

You can read here how our partners are adding income maximisation to their debt advice platforms.

Feel free to reach out if you want to explore how you can embed a benefits check into your banking journeys and view our benefits platform in action!