Digital banking poses challenges preventing another PPI - KPMG United Kingdom
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Digital banking poses new challenges to preventing another PPI

Digital banking poses challenges preventing another PPI

From today consumers will have exactly two years to claim payment protection insurance (PPI) but whilst an end is in sight for PPI, the rise of digital banking presents a host of new challenges to protecting customers, and bank balance sheets, according to KPMG.


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As sales increasingly happen online the task of identifying customers’ vulnerabilities and levels of understanding about the products they are buying, becomes more difficult. When products are sold face-to-face the salesperson can make a physical assessment - for instance signs of Alzheimer's may be fairly apparent - but to get a machine to make that assessment requires very clever programming and significant thought about the process the customer has to follow.

Responsible website and app construction will also play a crucial role in customer protection. Customers expect websites to be intuitive and to direct them to the most relevant content or products. However, banks have a very serious obligation to make sure their use of behavioural science doesn’t cross the line and begin to nudge customers towards certain products, or lead them to a purchase without an appropriate amount of time being spent on understating their options.

Fiona Fry, Head of KPMG’s Regulatory Centre of Excellence, comments:

“Everyone is taking sales practices, culture and treating customers fairly very seriously. We’ve come a long way from the pre-crisis years. UK regulators have been global leaders in increasing personal accountability and driving cultural change but as we move into a digital world we have to remain alive to the new challenges that creates.

“Vulnerable customers are a huge focus for firms right now, but consumer engagement in financial services is low across the board and any of us could become vulnerable at any point. Banks have to get it right for everyone, all the time. Whilst technology creates some new challenges, it also holds the solution. Banks have a huge amount of data, used properly that can help them build highly tailored products and deliver effective customer communications, both essential contributors to avoiding future scandals like PPI in the digital world.”


Notes to editor:

For further information please contact:

Christina Bridge, KPMG UK
T +44 (0) 207 311 4252
M: +44 (0) 778 950 4905
KPMG Press office
Tel: +44 (0) 207 694 8773

About KPMG
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 13,500 partners and staff. The UK firm recorded a revenue of £2.07 billion in the year ended 30 September 2016. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 189,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.


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