Debt charity Stepchange has partnered with OpenWrks to help those in debt better manage their finances.
OpenWrk’s Open Banking technology will be used with a digital tool to support those struggling with credit card debt.
The ‘Money Coaching’ tool uses behavioural psychology and personalised savings challenges to help people with everyday spending and change how they manage money.
Consumer debt levels are still growing in the UK. According to Bank of England figures reported in January, unsecured consumer lending grew by 5.7% in the year to November 2019.
While the Bank of England reported the first monthly fall in credit card debt since 2013, overall consumer debt levels are continuing to grow, with £600m borrowed in November alone.
Stepchange said that initial support will focus on those people that enter the charity’s new online persistent debt service as it builds on its strategic vision to double the number of people it helps over the next few years.
Research carried out by credit reference agency Experience, which analysed more than 200,000 anonymous client records from Stepchange, found that 88 per cent of those in debt are highly engaged with the online world and use the internet to access a wide range of services.
However, when it comes to managing their finances online through money management tools and online banking, 40 per cent said it was highly unlikely they would make use of what was available – the majority of these, the research showed, were older clients and retirees.
OpenWrks Group CEO, Stuart Bungay said: “The Personal Finance Management market is crowded with tools that show people what and where they are spending but few of these tools actually help people change their underlying spending behaviour to help improve financial resilience.
Phil Andrew, chief executive at Stepchange, said this initiative shows how Open Banking data can have a transformative positive impact for those in debt.
“The overall aim is to further support the many people in the UK who need our help, in an increasing variety of ways that suit their needs,” he said.
“Every bit of efficiency we create means increased opportunity for people worried about money to get the help they need, and increased value for those who fund us.”
Supporting the partnership between Stepchange and OpenWrks, Kate Alpin, interim chief executive at charity, Money and Mental Health, said it is “great to see Open Banking tools being used for something other than helping savvy customers get a better deal”.
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