Evidence type: Insight i
Qualitative research is more exploratory, and uses a range of methods like interviews, focus groups and observation to gain a deeper understanding about specific issues - such as people’s experiences, behaviours and attitudes.
Quantitative research uses statistical or numerical analysis of survey data to answer questions about how much, how many, how often or to what extent particular characteristics are seen in a population. It is often used to look at changes over time and can identify relationships between characteristics like people’s attitudes and behaviours.
There are approximately 65 million active personal current accounts in the UK. Incidental charges incurred by consumers on their personal current accounts (PCAs) can be substantial, particularly for relatively small amounts of unarranged borrowing and unpaid items. The competition and Markets Authority (CMA) estimates that in 2014 these charges amounted to £24 annually per PCA, equating to an estimated £1.2 billion across the UK market. While these figures reflect a genuine demand for credit, some of these charges could have been avoided if consumers had been made more aware of their balance. Additionally, previous research from the Financial Conduct Authority (FCA) has shown that consumers who register for mobile banking and text alert notifications manage to significantly reduce these charges. Despite these alerts having been made available to customers of the majority of UK banks for several years, only between 3-8% of have registered for them.
A more recent policy initiative from the CMA required firms to enrol consumers automatically into both unarranged overdraft alerts and unpaid item alerts. However, little is known about the impact of automatic enrolment and whether some sub-groups benefit from it more than other groups.
This 2018 report from the Financial Conduct Authority attempts to estimate the effect of automatically enrolling customers into unarranged overdraft and unpaid item alerts.
The FCA uses a large and detailed dataset containing the transactions from 1.5 million consumers across six major banks from January 2015 to December 2016. The data includes details of customer accounts, customer demographics, overdraft arrangements, account transactions, self-service banking log-ins (online, mobile, etc) and other relevant banking information. The full dataset comprises over one billion account transactions.
The FCA also look at large-scale automatic enrolment exercises carried out by two major retail banks. The samples from the two banks are broadly aligned to the wider market, based on a comparison with representative customer samples from the UK’s six biggest PCA providers.
The focus is on consumers that use their PCA as their primary payment account and that are responsible for the charges incurred on their accounts. As a result, dormant accounts, secondary accounts, accounts belonging to defaulted customers and accounts with ‘uncharacteristically high levels of activity’ are excluded.
Andrea Caflisch, Michael D. Grubb, Darragh Kelly, Jeroen Nieboer and Matthew Osborne