Data Analysis the key for UK banks

According to technology consultancy Detica many UK banks do not have the technology in order to comply with new codes on consumer debt management.

The UK voluntary Banking Code means that both banks and building societies must offer greater personal support consumers heading into debt problems, initially beginning with the identification of customers who are at risk of defaulting.

Detica’s research indicates that the majority of UK retail banks are using outdated analysis of customer data which will make them inefficient in identifying customer who are at risk as per the new code.

Maggie Scott, executive manager at Detica’s Financial Services unit has said that the regulatory requirements will mean that the banks will actually have a great deal of data in order built a strong consumer profile, although banks have historically only used the data during the application process.

Detica warned that the banks must not use the data to identify customers that could potentially be in financial stress and discuss possible solutions with customers, as the aim of the new code is to reduce debt spiraling out of control.

The UK banking code now places the onus on the lenders and the creation of a culture of responsibility and will benefit both the banks and the customers as it will be a primary measure to curb financial stresses in the current economic climate.