Artifical Intelligence could help firms comply with consumer duty, according to a company which harnesses technology in the mortgage industry.
Zahra Hassan, co-founder of Eligible, thinks AI could “transform customer support structures”.
Hassan argued that AI can measure a customer's level of understanding of existing financial products before providing bespoke expertise.
She said: "AI has the power to transform customer support from a reactive relationship to a proactive one.
"Instead of banks providing support only when the customer asks for it, AI can detect those who are likely to need assistance and proactively engage with them, fostering education and active dialogue.
“What AI can do today is interact with customers and measure the level of understanding of their existing product before providing bespoke financial expertise. Based on this, we can start to form views on the likelihood that they could struggle to meet their payments."
The consumer duty rules were rolled out on July 31 by the FCA and mean there are stricter rules on customer satisfaction applied to the financial services industry.
Hassan added that research from the Personal Finance Research Centre at the University of Bristol found 30 per cent of disabled households, are reported to be experiencing serious financial difficulty, compared to just 10 per cent of non-disabled households.
For Hassan, this shows it is more important than ever that financial institutions take an “activist approach” towards fostering financial literacy.
Fellow co-founder Rameez Zafar, added that banks can play a part in helping people understand finance.
He added: "Banks bear a significant responsibility in helping Brits improve their financial literacy, and they are inherently motivated to refine their language in digital channels in order to do so.
"The crucial shift in the concept of financial literacy lies in recognising that it's not merely about comprehension at the point of sale for financial products such as mortgages, credit cards, auto loans, and personal loans, as these are not everyday acquisitions."
tara.o'connor@ft.com
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