Popcash Research Report: Payday Loans, Debt Culture and Banks by FutureGov

Research Summary & Product Definition Promoting financial resilience and preventing crises debt in Lewes District and Eastbourne

FUTUREGOV

By the time people get to me they are already desperate. It’s about prevention. It’s about getting that message across and how you do that. It’s also about having a point of contact. (Councillor, Lewes)

Contents 1

An Introduction

Financial resilience in Lewes District

The first design brief

Research methods and approach

Headline lessons about credit unions

Credit union loan approval service map

Key lessons: payday loans, debt culture and banks

A common tale of debt - catalysts and behaviours

The new design brief

Principles of a money management tool

Who is the product for?

Jamie- young professional

Roxanne- indebted mother

Lesley- incapacity claimant

Mobile first and digital inclusivity

How does Popcash work?

Needs we identified...

...and how Popcash can meet them

Introducing Popcash- features list

Contact details

25 Appendix

Project Project Team Team FutureGov: Project Sponsor: Dominic Campbell Project Managers: Amanda Gore, ZoĂŤ Bierman Head of Delivery: Tim Fowler Design Lead: Harriet McDougall Product Developer: Ben Ashman Research: Kieran Dhillon, Tom Tobia, Amanda Gore, Harriet McDougall Eastbourne: Project Sponsor: Pat Taylor Debt Consultants: John Nelson, Andi Edwards

Contact dom@wearefuturegov.com harriet@wearefuturegov.com pat.taylor@eastbourne.gov.uk

The Lewes & Eastbourne LAB The Lab is an Innovation Space for Lewes District and Eastbourne Borough Council, working with the councils and other service providers to develop and test new ideas for improving financial resilience in the area. http://www.leweslab.org/

ÂŠ FutureGov 2014

My older boy says to me ‘how are you going to pay for food mum?’. He’s 10 and already worrying about bills. He goes out and earns pocket money at my mum’s house, he gives it to me. He shouldn’t have to do that at 10. That’s what it’s like. (Ella, 34, Lewes)

An Introduction Executive Summary

The cost of living is rising; incomes are stagnating or falling and benefits are getting cut. The number of people and households likely to encounter difficulties is significant. A Resolution Foundation* report suggests that two thirds of those on low-to-middle incomes are struggling to keep up with bills or falling behind. A quarter are unable to replace or repair broken electrical goods. As the recession bites, there’s a growing need for ways of supporting management of personal finance.

of debt to make proactive, responsible financial decisions. Enhancing relationships with providers (eg. councils, social landlords, credit unions), is key to fostering a culture of trust and respect. Popcash is a mobile and web-based app designed to encourage financial confidence and control. It gives clarity to finances by managing essential outgoings, encouraging proactive budgeting action and prompting users to seek help from the right places at the first signs of trouble. Born out of extensive research into the rise of short-term, high interest loan culture and financial vulnerability, Popcash aims to prevent those at risk of problem debt from falling into common traps: late payment charges, overspending, and avoidance.

What is a Product Definition? This document is a comprehensive overview of the Popcash research project and the resulting product. It’s purpose it to to give a 360º view of the project, from the original research conducted and conception of the idea, right through to the concluding product specification. It’s goal is to provide clarity around decisions taken by the project team, features of the final product and plans for implementation and scaling.

This means equipping those most at risk

* See the full report here: www.resolutionfoundation.org/publications/stateliving-standards/

That’s the thing, I think they’re meant to be doing that benefit cut thing soon for certain families but how are people going to survive? If it were me, I’d do all my food shopping and that first before I pay any bills. A lot of people are going to be evicted. (Leo, Eastbourne resident)

Financial resilience in Lewes District In the context of public sector cuts and welfare reforms, it’s becoming clear that the financial resilience of low income households has decreased. Research began working alongside Lewes District Council; looking at how they and their partners might be able to help people who are struggling financially, particularly in the light of upcoming welfare changes. Our conversations confirmed expectations about what people were struggling with – household costs, little capacity to deal with unanticipated costs or events such as their cars breaking down, increasing debt, finding fulfilling work. The list of what people are struggling with is mostly as expected, but the research was revealing in terms of how people might be best supported.

Important lessons from first-stage research Too little, too late Although there was much praise for support services in Lewes, we also heard repeated tales of people accessing formal support ‘too late’, where crisis could have been averted if only people had sought out help earlier. Emotional support And yet when we spoke to people about how they felt when they began to struggle financially, we heard them express a range of emotions – false optimism, denial, pride, shame and stigma. Emotionally, they are not always in a place where they are ready to go out and seek formal support and

they’ll often turn to more informal support networks – family and friends – first. Offer a kind hand These insights into people’s experiences raised questions about how support could be best provided and led us to a set of principles that underpinned our solutions: Design ‘soft’ (or, sensitive) solutions that incorporate how people feel and find ways of reaching people, rather than expecting them to come and find services. You can see the intial ‘Beyond Benefits’ report and read Kiran Dhillon’s summary of it’s findings here.

Design ‘soft’ solutions that incorporate how people feel and find ways of reaching people, rather than expecting them to come and find services. 3

The first design brief

After the first-stage research, we started work on a concept for a mobile product that would encourage people to access low interest loans from responsible lenders, such as credit unions, to rival high-interest payday lenders. ÂŠ FutureGov 2014

Research methods and approach

DEEP-DIVE RESEARCH WITH CREDIT UNIONS

INTERVIEWS WITH USERS AND EXPERTS

• visits to 7 credit unions: Salford credit union, LCCU, East Sussex CU, London Mutual, London Capital, London Plus • interviews with 3 credit union board members • shadowing staff through different tasks and services • using workshops and observations to map services • building client personas with frontline staff

• interviews with 9 people with personal experience of debt • experts in credit unions, community finance, social investment, debt and debt management, welfare reform, social housing, alternative banking tech and mobile behaviour • collecting anonymous stories of debt through online blog and survey

SECONDARY RESEARCH AND EVENTS • secondary research across credit unions, debt, mobile behaviour and security, • research into loans companies, their regulations and their processes • exploration of financial innovation and new technology • attending events on alternative finance, digital money, and future of payment systems

Headline lessons about credit unions Interrogating the brief We delved into the world of Credit Unions, personal finance, and money management to get to grips with where the real problems lay, and identify what an accessible and useful mobile product to support this could look like. We spent time with Credit Union staff, members and board members, collated people’s stories of debt, met with and interviewed a number of experts in community finance, debt and debt management, welfare reform, social housing and alternative banking technology, and immersed ourselves in the most recent literature we could find. Our headline discoveries made us question if working with credit unions was a feasible option, and helped us to see a more detailed picture of the wider cultural and behavioural issues which can be the catalysts for problem debt.

There are many issues which would make working with Credit Unions difficult Big changes on the horizon The landscape is shiftng for Credit Unions; changing legislation, consolidation and on-going modernisation programmes (such as ABCUL initiative) mean they’ll be experiencing a state of flux for at least the next 18-24 months. Saving and membership are turn-offs Credit Unions are set up to encourage saving before loans are made, something many payday loan users do not want, instead looking for immediate access to cash. Credit Unions don’t like Payday loans Because the public are so used to the payday loans model, and CUs can massively undercut the competitions’ high rates of APR whilst also supporting saving, we came at the research with the assumption that helping Credit Unions get into the payday loan market would be a beneficial step. However, credit unions have very different views on payday loans, with many feeling that the model behind fast repayments goes against their ethos to teach responsible financial behaviour. Several told us they would prefer to give larger amounts of money over longer periods of time.

Payday loans aren’t financially viable Due to the current APR cap of 26.8%, Credit Unions make a loss on servicing small loan amounts. On a loan of £300 for one month they can only charge a maximum £6 interest. Lack of identity and visability Credit Unions have a big image problem: Many people are unaware of Credit Unions, and those that are often think of them as a ’poor mans bank’. This is compounded by the look and feel, both on the ground and online, with no coherent brand identity and very limited marketing materials, dependent on each Credit Unions available budget and staff expertise. Out-dated, disparate systems and IT Technologically, the back-end systems used by the CUs we spoke to varied dramatically, meaning a digital product could not be easily designed for use across unions. We came across three different types of software implemented, all of which were originally developed over 30 years ago. More than one relied on paperwork-and-filing systems in place of IT systems.

These findings made it clear that it was not going to be possible to create an app which would be compatible with credit unions yet. They are still dealing with problems beyond the scope of influence, and as yet don’t have the capacity or financial viability to compete with payday lenders.

... you’re just thrown out into the world and you don’t know about your tax, your P45, your P6 ... to this day I still don’t have a clue... I was only young and dead selfish, I just spent it on other things. I’m devastated now because think if i want to get a mortgage in the future there’s no way I could do that so I’m gutted (Rebecca, 20, Manchester)

Credit unions’ loan approval process user jouney map:

BECOME A MEMBER

APPLY FOR A LOAN

A journey map based on average practices across credit unions we visited. Salford credit union, LCCU, East Sussex CU, London Mutual, London Capital, London Plus It is worth noting that this is an approximated service planno two credit unions were exactly alike.

form online/in-branch/printed PDF

USER ACTION

pay membership fee

standing order saving

fill in form + provide proof of income and address

has account for standing order

TOUCHPOINT

FRONT OF HOUSE

BEHIND THE SCENES SYSTEMS

ID check

chat

check forms

copy

check forms

interview

copy + scan

referred to credit committee prepare paperwork to send to new member enter into software

CURTAINS

FOCUS

PROGRESS

SAGE

Credit check

income against statements

EXPERIAN

EQUIFAX

DECISION MADE

LOAN IS PAID IN

signs loan agreement

LOAN IS REPAID

standing order

no payment

contact to notify and offer advice

returns form

no response

DWP

DCA

Department for Work + Pensions (if on benefits)

independent debt collection agency

call to discuss options letter to notify

text to come in-branch

letter with contract

Decision to grant loan or not

BACS transfer (60p)

pre-pay card

BACS

ÂŠ FutureGov 2014

cheque

(sometimes manual)

CURTAINS

decision by credit controller

manual check

FOCUS

PROGRESS

SAGE

referred to outside agency for debt collection

Payday loans, debt culture and banks; key lessons People use Wonga for a reason

Debt Starts with the banks

People lose touch with what they owe

Service capitalizes on desperate situations and encourages irresponsible borrowing

Culture of debt is led by commercial banking, normalising debt and neglecting to offer support

Many people with multiple debts find it difficult to see the finish line- making debt seem endless

Despite extortionate fees, for many people we spoke to who had used Wonga or similar, it seems the price of the loan was a secondary consideration given the need for speed and easy access based on the situation they found themselves in.

Banks are very quick to offer overdrafts and credit cards but give limited advice on money management. New account holders, many of whom are still teenagers may have limited, if any, understanding of banking practices and charges.

“The key factors influencing the decision to take out a payday loan are usually just speed; convenience; and the ‘no questions asked’ approach” - Credit Union

“...they need to make it clearer, ‘cause when I signed up for my credit card there was loads of APRs and things and you don’t have a clue. It needs to be simplified and more on our wavelength” - Lucy, 21, Salford

Whilst itʼs easy to check your bank balance, knowing where you are with repayments seems much harder. The people we spoke to could often tell you what they borrowed and how much they pay monthly, but few were able to say how far into their repayment progress they were, or knew when a debt would be paid off.

Other factors described included: • The simple application processes • The short-term nature of payday loans • The anonymity of the process, particularly online • The clear fee structures, easy to understand how much they had to pay back and when. They are seen as being presented more clearly than products offered by High Street banks such as overdrafts and credit cards. The relative ease of getting loans has meant a slip into repeat behaviour.1 Wonga in particular has enabled such a fast application and approval process for repeat customers that money can be received within minutes- something Credit Unions can’t hope to match. Wonga and other payday lenders provide a service for which there is great demand in a way that credit unions cannot yet compete with

One interviewee talked about her son’s debt problems beginning when he was 16 and was allowed to open a bank account with an overdraft- “I wish banks would decline your card when you don’t have money” Time and again we heard stories of people whose debt problems have grown out of late payment and overdraft charges which are often the start of a downward spiral into a life of managing interest repayments but never managing to pay off debt.2

How could we help translate financial jargon and help people to stop incurring charges?

The impetus to pay up that payday and doorstep lenders bring seems to be changing the way people view longer-standing debts such as credit cards / store cards / overdrafts; these are seen as lower priority because of the high-pressure tactics employed by the short-term lenders- making it more likley that payments will be overlooked and charges incurred.

“Once they have got their teeth into you, they never let go. You just get email after email, text after text, all saying you are approved for x amount of money today” Rob, 57, Newhaven Many of the interviewees were in debt from loans taken as teenagers, and several had IVAs or debt management plans. The general mood was that they would be in debt for the foreseeable future. How could we help to track repayment progress, and make it clear and easy to see how much you’re paying?

I have exhausted all possible solutions, with me taking out a loan with my bank but unable to do so as I have consolidated my cards etc, I pay everything on time but the amount is quite hefty (due to me being an idiot when I was a teenager). I pay everything on time but have a low credit score due to all of my existing cards and I’m considering taking a loan out to pay the debt that she owes, she [my partner] is falling apart in front of my eyes and absolutely kills me. (paydayidiot, on Moneysavingexpert.com’s forum)

Key catalysts and behaviours which lead to crisis debt

Take out loans and credit from mainstream lenders

Unforeseen circumstance means a repayment is missed, incurring fines

Aggressive marketing and questionable decisions to grant credit by mainstream lenders

Redundancy, illness, family bereavement and marriage breakdown are some of the most common causes of being pushed into debt

A lack of understanding of loan terms3

Emergency repairs to a car or household implement can also be expensive pressurepoints that can catch people off-guard4

More and more businesses offering ‘buy now, pay later’ and store credit cards. Temptation to take credit is stronger than ever Often person is in a good financial position, therefore feel they can afford to take a loan

Lack of savings puts them at significant risk to a change in situation or unexpected event5

Going into an overdraft to pay an unexpected bill, or neglecting to meet a repayment installment can mean the imposition of a hefty fine In desperation, many in this situation are tempted to turn to alternative lines of credit because they don’t want to add to their [already substantial] outstanding debt with commercial lenders6 Studies show the majority of Wonga’s customers believe or believe that it will be a ‘one-off’ and they won’t have a problem paying it off at their next payday7

Feeling that debt is normal: ‘everybody has debt’ so less concern over applying for loan in first place

Has to take out another loan in order to help pay off first one

Pressure piles up as it becomes more and more difficult to pay bills Can get drawn in to ‘debt consolidation schemes’ by unscrupulous lenders keen to take advantage8 Mental health issues begin to develop as they fall under increasing pressure to meet repayments and pay bills9 Falls into denial - believes they will be able to sort it out next week10

Begins avoiding correspondence and banking due to stress Late payment fees begin to build up as avoidance means more payments are missed Relationships begin to break down due to informalised debts or the stress of financial burdens 12 Falls into state of depression or anxiety which makes it more difficult to act 13

Turns to family or friends to borrow money instead of seeking help from outside11

Changes phone number, stops opening letters, and becomes afraid to answer the door 14

Losing track of what they owe- debt starts to seem endless and hopeless

Begin missing out on meals or other essentials in order to meet payments 15

Seeking help; needing intensive support, lack of knowledge/resource Unaware of what services are available mean that they think they don’t qualify or there’s nothing anyone can do to help them Not knowing what benefits they’re entitled to at times when they most needed bailing out - trying to log backdated claims gets very complicated 16 Finances so out of control that it takes a long time and a lot of the support services time to begin to help them in a tangible way 17 Fear of being judged by support services or peers or feeling too embarrassed to admit that they need help 18

The new design brief

“How might we support people in keeping on top of their bills and repayments, and encourage them to seek help at the first signs of trouble?”

A money management tool for financial resilience should... Encourage me to seek help at first signs of trouble Help me keep a track of my essential payments Let me know what I can spend Show me where I can go for a responsible loan Help me see that I am making progress Reach me where I canâ&#x20AC;&#x2122;t avoid it ÂŠ FutureGov 2014

Who is the product for? The vulnerable are not always who you expect them to be. Time and again our research has shown that those most likely to get drawn into a cycle of bad debt in the first place are those who believe they can afford to borrow, and then get caught out. Through our research we have identified three key user groups at highest risk of falling into crises debt: • • •

those who are unable to earn (existing on pension / disability allowance etc- watching every penny) those who earn but tend to spend over their earnings (prone to taking out short loans) those who are in debt already ( sometimes in receipt of benefits as well, and in need of budgeting help)

It’s become clear that the most effective design interventions will be preventative measures and nudges to action. When a person falls into a serious debt situation they are likely to need intensive, bespoke and highly specialist support that a product is unlikely to be able to provide alone. There are however, tools which might be created in order to support a recovery or to facilitate effective management of budgeting or debt.

Stories of debt in the media Tracy Castano, 31, from Coventry went bankrupt after racking up debts of £62,000. “I had a well paid engineering job but lived beyond my means and assumed I’d be able to pay off my credit card and store card bills in the future,” she says. “My partner and I even remortgaged our house to pay off some debts.” Disaster struck when Tracy split from her partner and lost her job. Her house was also repossessed. She muddled on, trying to pay off her debts month by month. But when she met a new partner and realised she was expecting her first child, she knew she couldn’t carry on. Tracy thought she owed £20,000. But when she went to Citizens Advice for help, she was stunned when the total amount was worked out. “It seemed ridiculous that I owed £60,000,” she says. “At 27, bankruptcy was my only option.” Initially, Tracy had no idea what the process involved and her mum had to lend her the £750 she needed to file for bankruptcy. Tracy is now married to Steve. He has been able to support her and their daughter Libby, three. But she knows the shadow of bankruptcy is hanging over her. “I’ll never be able to get credit or apply for a

mortgage but I wake up every day feeling lucky. I’ve been given a second chance.” (from The Mirror, February 2013) Jeannette Sharratt from Blackpool borrowed £2,500 18 years ago from a “sub prime” lender called London North Securities in order to set up her business. The firm charged an interest rate of 40%. She ended up with a debt of £100,000. The company wanted her house. Although Jeanette missed a few payments, over12 years she had repaid £10,000 of interest on a £2,500 loan. The stress of fighting for her house took its toll on the whole family. Her son Jamie says now that he couldn’t concentrate at school. Jeanette remembers staying inside for days, refusing to go out fearful the company would come and change the locks. She even sold her engagement ring and all her furniture and carpets to try and make the payments. Last November a judge finally wiped the Sharratt’s debt and threw out the company’s bid to repossess their home. A few days later her husband Frank had a stroke and can now do little for himself. (From the Daily Mail November 2012)

alright for money, but I don’t know “ I’m much about my banking options and I tend to spend too much. ” HEADLINE STATMENTS: STATEMENTS JAMIE YOUNG PROFESSIONAL • MALE • Big city & suburbs • Professional

DESIGN NEEDS DESIGN NEEDS:

• Self-aware and keen to help himself • Struggles to budget for payments - likes to have a good time. • Impatient - short attention span • Independent of all financial support services

TOUCHPOINTS & TECH LITERACY TOUCHPOINTS AND TECH LITERACY: Extrememly tech savvy: regular online-banking, smart phone usage every day

• Full-time job • Single • No dependents

SPENDING HABITS: SPENDING HABITS High levels of disposable income, but usually finding it quite hard to cope or manage money. Lots of money is spent on transport (commuting) and bills, with whatever’s leftover going on high spec. consumer electronics, clothes etc.

BANKING BANKING HABITS HABITS: Current account and often one credit card with a high-street bank. Sometimes a mortgage, too. Little to no savings- particularly as he has just bought first house

CHECK BALANCE: Stop over-spending - know how much he has available ACCESS BILLS + REPAYMENTS DETAILS Easily organise oblugatory out-goings so he doesn’t need to worry about them READ/GET ADVICE ABOUT BANK ACCOUNTS Better understand money options so he can make better tactical financial decisions WANTS AND EXPECTATIONS OF POPCASH: • Quick access to balance • Beautifully designed and easy to use • Detailed bill and repayment info in one place • Quick set-up • Easily taylored notifications and settings

used to think it was normal “ We to be in a bit of debt, but now it’s all getting a bit out of hand. ” ROXANNE INDEBTED MOTHER • FEMALE • 46 • Fringe towns • Low paid part-time job • Married • Children at school

STATEMENTS

DESIGN NEEDS DESIGN NEEDS:

• Money confuses her which makes her nervous • Juggles debts, never feels she’s getting anywhere. Manages family finances • Underconfident and prone to giving up • Receives some child benefit and working tax credits. Has sought advice from CAB before.

BALANCE INCOME AND OUTGOING Make sure there’s always enough money in her account to pay all her bills.

TOUCHPOINTS & TECH LITERACY TOUCHPOINTS AND TECH LITERACY: Most banking happens in-branch, though does a little online banking. She owns a smartphone, though mostly uses it to browse the web and is easily intimidated by anything perceived as complicated technology.

SPENDING HABITS SPENDING HABITS: Family-focused, and finds it hard to say ‘no’ to the needs of her children, putting financial pressure on at Christmas. Lifestyles not lavish, but used to taking family holiday every year.

BANKING HABITS BANKING HABITS: A current account and several thousand pounds of debts, spread across several credit cards, hire purchase agreements and personal loans. She has used doorstep credit in the past. No savings.

TRACK HER REPAYMENTS See how much debt she is in, to whom and how long it will take her to pay off. KNOW WHERE AND WHEN TO SEEK HELP When she is feeling confused or overwhelmed who should she contact and is she entitled to? WANTS AND EXPECTATIONS OF POPCASH: • Finances become clear and simple to understand • Easy to use - no tech or finance knowledge needed • Doesn’t need to check on it regularly • Reassuring

I’m on fixed income I’m always “ Because having to budget so carefully - it gets tricky to keep a track of everything. ” LESLEY INCAPACITY CLAIMANT • FEMALE • 62 • Disabled • Divorced-lives alone • Grown-up children with grandchildren close by

STATEMENTS HEADLINE STATMENTS:

DESIGNNEEDS: NEEDS DESIGN

• Set amount of money each month means having to be aware of fincances all the time • Constantly having to check online banking to make sure balance and billsare in check • Money-savvy but exhausted by it • Claims full incapacity benefits for ongoing illness

TAKE THE HARD WORK OUT OF BANKING Let her know what’s going on without her having to figure it out.

TOUCHPOINTS & TECH LITERACY TOUCHPOINTS AND TECH LITERACY: Mostly in-branch or over the phone. Doesn’t own a computer or a smartphone and is intimidated by technology and will avoid it if possible.

SPENDING HABITS SPENDING HABITS: Very careful. Maintains a fairly modest but comfortable living, but always sticks to strict spending regime as money is tight and has no savings - an unexpected payment can tip her over the edge.

BANKING HABITS BANKING HABITS: A current account, some catalogue debt and a credit union loan. Small amount of debt and manageable repayments.

SEE HER AVAILABLE BALANCE Let her know how much he has available so she doesn’t have to go to the cash-machine before a direct debit is due. KNOW WHERE AND WHEN TO SEEK HELP Who should she turn to if she has an emergency payment to make? Point her towards support and financially responsible loans. WANTS AND EXPECTATIONS OF POPCASH: • Save her the constant anxiety of having to keep on top of things • She doesn’t want to go anywhere near a computer if she can possibly avoid it • Clear and simple - time saving and to-the-point • Not patronising

Mobile first and digital inclusivity In October 2013, research showed that 50% of mobile phone owners use mobile as their primary internet source19

Digital Inclusivity Of course, not everyone is comfortable with digital solutions; for Popcash to be an effective tool for anybody who might want to use it, it must be accessible to those who have limited access to, or aren’t able to use the internet.

According to the latest research by Ofcom over 91% of UK adults stated that they personally owned a mobile phone, of which just over half (56%) said their mobile phone was a smartphone (compared to 45% the previous year). Of the people interviewed during the course of research, we found that these figures were consistent - with approximately 3/5 of those surveyed owning a smartphone. Conversations with financial support providers confirmed that the majority of their clients used mobile for regular internet access. It is more practically affordable to own a contractoperated smartphone than it is to buy a computer and a seperate broadband package.

By facilitating a fast and intelligent set-up process, it is possible for a case worker, family member or friend to set up your Popcash account for you in one go.

image from: mobilemarketingmagazine.com

This evidence pointed toward building Popcash for mobile-first use, developing apps for both iOS and Android platforms, backed up with a web app which syncs with your devices in real time.

Start by attaching your bank account, selecting your regular bills and choosing your notification settings in one quick session. After that, you’ll carry on receiving text notifications of your balance, when bills are due to be paid and if you’re looking a little low on funds.

How does Popcash work? We know that it’s very important to our users that Popcash be as quick, simple and intelligent to set-up as possible. By using a third-party intermediary service - Yodlee- Popcash has the ability to scrape information from you online banking data, making it very easy to see what regularly leaves your account. We also know that our users often pay essential payments in cash. Popcash allows you to add manual cash payments or bank transfers quickly and simply, so you can make your Popcash account as detailed as you need.

3 / Add any other essential bills and repayments that you pay in cash or through bank transfer

1 / Popcash checks your bank statments and pulls in direct debit information for quick set-up

4 / Choose which bills and repayments you would like to receive notifications for, and how (text, push or email)

2 / It sorts your payments into categories: Bills, Repayments and Income

5 / Popcash will alert you of who, how much and when a bill is due, as well as your current balance, and pointing you toward advice if you can’t pay it

Needs we discovered... -£250.00 overdraft -£250.00 overdraft

catalogues catalogues

name: Roxanne age: 46 status: married, 2 children frustrations: money ‘just going’; not having an idea of what she spends on debts; missing payments and getting penalties; finances feel confusing and intimidating

! !

no balance :(

credit cards

high-street loan high-street loan

social loan

Gran

social loan

Gran

X X

Complex financial landscape

Caught out by direct debts

Roxanne has so many debts that she finds it almost impossible to keep track of them all; she doesn’t know what they are costing her, or when they will all be paid off.

She loses track of payment dates, or is confused by ‘on-or-around’ dates. And she often caught out by direct debits leaving her account before her benefits get paid in. This had lead to mounting penalty charges and admin fees which she can’t afford to pay.

of her finances, control of her outgoings and to stop getting penalty charges

Several catalogue debts; credit cards and a social loan. Previously she had a cash converters loan

APR! APR!

Confusing financial language When taking out a new loan, credit card or overdraft account, she is confused by the financial jargon that the banks use. She wishes they would explain things better so she knew what she was getting into.

dwp dwp

Bank accounts: Halifax

Debts: Halifax overdraft;

interestcompetetive! rates! interest rates!

! !

aims: to gain understanding

current account; credit union savings account.

competetive!

no balance :(

credit cards

Pays by cash

Prefers automatic repayment

Doesn’t know if direct debit is value for money -goes to the bank in person once a month to pay credit card debts- sometimes she forgets or misses the date, incurring more charges.

She has a social loan, which she finds much less ‘painful’ and easier to manage as it’s taken directly out of her benefits. It also is a relief that she can’t accidentally spend that money.

Wants to be notified

When out shopping with her kids or husband, she finds it hard to hold back on her spending. She wishes she’d be told when her balance is low because she avoids checking it.

... and how Popcash can meet them M balance T W is TH Your

1 2 3 £159.00

EDF bill due 27/7/2013

competetive!

interest

M rates! T W

APR! S SU

competetive!

interest rates!

APR!

Aha!

£45.00

Contact 0800 000 000 to discuss your bill

Aha!

£150.00 AVAILABLE BALANCE AFTER OUTGOINGS

PHEW!

Shows what’s safe to spend

Popcash calculates her outgoings ahead of time, only showing her the balance she has available after all her bills and repayments have been paid, helping prevent overspending.

Clearly displays payments

Decyphers the jargon

She can see clearly using Popcash when bills are due to be paid, and when direct debits are set to leave her account. If her funds are a bit low before a bill is due, Popcash lets her know, giving her time to plan ahead or change the date of the payment.

£150.

AVAILABLE BALANCE AFTER OUTGOINGS

PHEW!

Points her towards help

Popcash has information for financial support services and your options if you think you might be getting into trouble. If Roxanne feels she needs some help, the app will let her know where to turn.

Popcash breaks down financial-speak into plain English, allowing her to understand what taking out another account or loan will mean to her in real terms. It also shows her some alternatives to high-street loans she might not have thought about.

Update on-the-go

She can add outgoings which were paid in cash. Popcash knows when a bill is due, so it’ll ask her if it’s been paid if it doesn’t notice a direct debit leave her account.

How will this change things for the better?

Roxanne can set up Popcash to send her alerts and prompts for her bill payments and balance status. It also sends you prompts of who to contact if you have a problem, so you can take action and get in touch immediately.

Cutom notifications

Budgeting: Roxanne can now find out how much money she has available to spend at the touch of a button. This helps her prioritise what she wants to spend on, and she no longer feels her spending is out of control.. Knowledge: She has a greater understanding of the state of her finances, and she feels equipped to make better decisions.

Bills and repayments: She still sometimes has trouble meeting some of her essential payments, but she’s never taken by surprise, and when she does she knows what to do next, instead of pretending it’s not happening.

Progress: Roxanne used to feel that debt went on forever; that she would never be free of debt. Popcash shows her the progress she is making month-by-month, and when individual debts will be paid off for good.

ÂŠ FutureGov 2014

Wireframes From the insights and needs weâ&#x20AC;&#x2122;d uncovered through our research, we began to turn thoughts into interactions, visuals and layouts - elements of the final app which combine to be known as UX or, User Experience.

Quick-add new payment

main nav

represented balance - up-coming payments

Link to list of up-coming payments

primary account and budgeting info

We wanted Popcash to be clear, unintimidating and attractive. The research was plain in that the interface had to be as simple as possible- and as far away from a spreadsheet, bar chart or pie chart as possible. The scheme chosen is clean and elegant, with finances broken down into three categories: income, repayments and bills. Aesthetically, the categorisation is further accentuated using explanetory icons and colour-coding.

ÂŠ FutureGov 2014

link to payment calendar view

3 soonest or overdue up-coming payments

swipe upwards to reveal full payments list

Quick-add new payment

settings (edit name, change details, notifications etc)

list filter buttons (by category)

Link to list of up-coming payments

shows amount due

shows name of bill list organised by soonest first

shows date due

link to payment calendar view

shows method of payment (cash: tap to confirm) shows account details (name on acc. and id #) links to provider contact details / details editable in ‘settings’ / freq. of bill and date of next payment

amount, provider/lender and date due

see payment history screen

ACCOUNT NAME (NICKNAME) settings (edit name, change details etc)

settings (edit name, change details, notifications etc)

shows available balance (primary only)

shows amount due

shows name of bill

shows date due

shows full balance link to list of future payments deducted

shows method of payment (cash: tap to confirm)

shows account details (name on acc., BANK NAME SORT CODE AND #)

shows account details (name on acc. and id #) links to provider contact details / details editable in ‘settings’ / freq. of bill and date of next payment

DIVDES AVAILABLE BALANCE BY DAYS BEFORE NEXT INCOME PAYMENT LINKS TO LIST OF PAYMENTS FROM/TO THIS ACCOUNT see repayment progress screen

see payment history screen

User testing 2: process and outcomes

It’s great having that well laid out plan - it’s something you want to have - but people are too lazy… it depends how much info you have to put into the app. I know I’m too lazy… if I neglected the app, would it still keep track of my finances?” (Julia, Retired, 62)

Testing our assumptions - user testing in Lewes Library We wanted to challenge the decisions we’d made based on our research when we were still halfway through the prototype build - giving us time to change or adjust either functionality or visual design. We set up camp in Lewes Library for a day, and did some light-touch research with locals to find out what they thought of Popcash’s design We wanted to challenge the decisions we’d made based on our research when we were still halfway through the prototype build - giving us time to change or adjust either functionality or visual design. To do this, we took some print-outs of the app designs and asked each person a set of questions based on a) their demographic b) their feelings about their finances c) thoughts about the app d) a prioritised list of features

Only 5/18 disagreed with “I rarely get caught out by a payment...” Most people we spoke to said they felt in control of their finances, but 15/18 said they had “worried about debt in the past”

15/18 said they “would recommend Popcash to someone I know”, and 11/18 felt they would use the app ‘every day’ or regularly’. Many people thought they would recommend it to a young person.

10/18 did not know where they would go for financial advice - when pressed most would ask their bank or would search the internet

7/18 felt they wouldn’t know “what to do if I can’t pay a bill.”

8/18 interviewed were self-employed or on 0 hours contracts and so their income was unpredictable

“I’m not sure what I would do if I got into trouble...I guess I would go to someone in my family, or go and plead with my bank” “My son could really do with this- he’s bloomin’ terrible with money!”

Who did we speak to? Internet use

Age range:

9% 45%

35%

20%

25 - 40

40 - 54

55 - 69

Technology ownership

73%

18% 73% every day 18% fairly often 9% occasionally

72% 13/18

89% 16/18

User testing insights We have been testing the fullyfunctioning Popcash prototype with a variety of people, including end-users, financial support practitioners and experts in the field. The aim of this was to get feedback about the User Experience (the design, interface and interactions) and features. Through these conversations we’ve gained valuable insights that point to some really exciting opportunities for how the Popcash tool could develop over the coming months. A summary of what we have heard is set out on the following pages.

Security information needs to be clear and friencly, but is not as important to people as we thought

Self-emloyment, 0 hours contracts and variable incomes are a big issue that we haven’t yet dealt with

There were very mixed feelings on this- it varied from person to person. Many did not ask and when we brought it up they seemed happy to take our word for it. A couple of people brought up worries about their info being accessible if someone got hold of their phone. One person asked about how the resultant data on the phone would be used, and expressed concerns around that.

A high percentage of the people we spoke to didn’t live on a fixed income. This is partly due to the context of the user testing, This is clearly a big issue which Popcash has not addressed. How can the app calculate what’s safe to spend if there’s no way of recording when the next income will be?

“I’m not sure about the security… someone could get hold of my phone on the bus… all my information would be available immediately to someone with my phone” “I’m the sort of person who just closes their eyes and hopes to be honest.” Action: A timeout and PIN access is really important - both for real security of info and for the user’s peace of mind. There also needs to be very clear and friendly security information available immediately and throughout the service.

Action: There’s some more Is there some thought needed here. Part of the registration questions could ask if you have regular income (PAYE, fulltime, Benefits) or if it’s variable (Freelance, 0-hours contract etc.) and take that into account. Is there value in showing the real balance of your bank account and simply highlighting green or red as to whether you can cover your bills for the next 30 days?

User testing insights Daily ‘safe to spend’ is better than a monthly total There was some mix, but in general daily seemed to get a more positive response from people- mostly because of the immediacy of its relevance. This came off the back of casual overspends: s few people mentioned spending too much when they went out to the pub, or on school holidays with their kids. A few said they thought the daily ‘safe to spend’ would incentivise them to spend less to see their daily amount increase. Action: We decided to swap out the monthly available income for a daily breakdown. This means that people’s immediate actions will be affected - the gamification element of spending.

People want to be notified

There was a very high level of approval for the idea of notifications. A few people said they wouldn’t want to be contacted ‘all the time, for every little thing’. A few already receive notifications from their banks and find them very useful. “It would be good to have trigger prompts ... so you know when you absolutely can’t avoid it any more.” Action: Make notifications more prominent within the design of the app. Think about allowing customisation of notifications from list view so that it’s clearer

People want to know what ‘safe’ really means Most people said that when presented with the ‘safe-to-spend’ balance number on the home screen, they wanted to know how and why it had been calculated. We have found that many people said they distrustful of advice concerning money, and would like to be offered the opportunity to understand their situation for themself rather than simply taking it at face value Action: It is essential that Popcash is completely transparent in it’s functions. At the next stage of design development, we will need to think carefully about how information can be integrated and easily accessible at every point where a user might want to have access to it.

Wireframes

Usually it feels like banking is ‘over there’ y’know? It’s really easy to ignore it- especially when you get stressed... ... seems like it would be really useful to engage with your finances in a daily way, without getting too stressed out. It might help to soften the blow if you’re used to seeing it! (Bjorn, Self-employed designer, 31)

Next Steps From our discovery research to date we have heard most strongly that the need for simplification of finances and clear, unintimidating information about financial support services would be most useful for both those dealing with and trying to avoid problem debt. We’ve also heard that Popcash could be useful in supporting front-line financial support staff by integrating a personal budgeting tool like the one they use to initially help their clients understand their income and outgoings. An unresolved issue which will need to be addressed early in the next stage of development is how Popcash can help support those living on zero-hours contracts, are self-employed or have variable income. There will be some adaption needed in the functionality of the ‘safe to spend’ feature.

What’s next? •

Immediate bug fixing and tweaks from user testing and feedback

•

Begin looking at methodologies of databasing services and organisations for support signposting. Look at some hyperlocal options.

•

Communication around the MVP begins

•

Marketing plan and distribution model

•

Assessing pros and cons of distribution via commercial outlets i.e. App store etc.

•

Design of the text-notification algurythms around signposting

•

Exploring design solutions to assisting variable-income users to budget

•

More user testing and feedback from endusers and front-line staff

•

Exploring potential uses for data generated on personal finance behaviours and trends

Introducing Popcash

Knows when you are behind on payments, and points you toward help that’s available Pulls together all your essential payments into one place Shows your available balance after bills have been paid Has information about responsible loan options Allows you to track your loan progress, showing you when you’ll be free of debt Notifications to your mobile by text or by email - never miss a payment again © FutureGov 2014

A simple app for complicated personal finances. Stay up-to-date:

@popcash popcashapp.com ÂŠ ÂŠ FutureGov FutureGov 2014 2014

Appendix 1. Payplan have seen cases where clients had an

excess of 20 payday loans. This has resulted in consumers getting into more debt before seeking help. Citizens Advice say that on average, they found in the years 2012-2013 that their clients with payday loans had eight debts, while those without payday loans had five. One interviewee told us that the use of payday loans “started as a necessity, but became an impulsivity”.

2. one interviewee living off his pension told us he

got into problems when he missed a direct debit and got charged £40 so went to Wonga. He has been living at the end of his £300 overdraft for a while and pays £20 per month to the bank but thinks this is purely for charges as the debt isn’t reducing. An interviewee in her early 20s described how she hasn’t had a bank account for the past 3 years because she got into a lot of debt through credit cards and overdrafts when she was 18 and owes money to three different banks. She now has bad credit rating, a couple of CCJs (county court judgements) and though she works in Tesco is unable to pay off her debts - ‘I can barely pay my bills now let alone extra bills on top of it’.

3. 5 million adults lack adequate literacy skills (NIACE 2011), and an estimated 7 million lack ‘functional numeracy’ (Leitch 2006; also see Carpentieri et al. 2010) 4. A Resolution Foundation report suggests that two

thirds (66%) of those on low-to-middle incomes are

struggling to keep up with bills or falling behind, and a quarter (26%) are unable to replace or repair broken electrical goods.

5. 63% of households living on below average

contractual payments worth more than 100% of their income, compared to 14% of other clients

9. 80% of people seeking help from Christians

incomes had no savings. 76% of low-income households had no savings or only savings of up to £1,500.

Against Poverty said their health suffered due to the stress of debt. 68% were prescribed medication by their GP, and 2 in 5 had considered or attempted suicide.

6. Commercial debt management companies have found that borrowers are using payday loans to pay off debts in the short term rather than dealing with the root causes of their debt problems. Payplan have seen cases where clients had an excess of 20 payday loans. This has resulted in consumers getting into more debt before seeking help.

10. “[So what did that feel like - the first week you couldn’t pay your bill?] Yeah it’ll be alright I can just sort it next week. And then next week comes and you don’t catch up and it goes on... I just tried not to think about it. If you don’t think about it, don’t know. It is worrying ‘cos when you come back to it and think I haven’t paid that for 6 months” (Kim)

7. Dr Gathergood, an economist at the University of

11. An increase in family lending has caused stresses on relationships, particularly between generations. One interviewee spoke of her son using her grandson as an emotional blackmail tool to force her into loaning him money that he has no intention of repaying; ‘They think parents should help their children’ Several younger interviewees talked of parents ‘helping out’ when they have run out of money or got into unexpected debt.

Nottingham, defined the market as being used by two types of people: I - People who have had a financial shock and need money quickly to address that, who intend to repay, will be in a position to repay and need the money now, for whom a payday loan can act as a high cost but effective form of insurance II - People who lack control in their expenditures and might take out debt in order to purchase something they want at short notice without an ability to repay. For them a payday loan is an opportunity for them to be a victim of their own behaviour

8. A report by StepChange debt charity report

shows that the average payday loan debt (£1,657) now exceeds average monthly income (£1,320) for clients. Over 65% of clients with a payday loan have

12. In three out of four cases surveyed by

StepChange, anxieties over unmanageable debt had undermined their confidence to support themselves and their families. Nearly 40% said their relationship with family and friends had been affected by their debt problems An ILC report on debt among older people found

that couples who struggle with debt are more than twice as likely to suffer marriage breakdown than those whose finances are steady

17. “I had one lady who came to us on Monday

13. “They bury their head in the sand. I’ve been there. They don’t realise they are in as much trouble as they are, they think they can get out of it, they hope for better times, they are in so deep when they hit a personal crisis that they can’t see a way out, they get ill, mentally ill and then they can’t deal with it because of the stress and the stigma and the pride issue” (Credit Union)

and she was being evicted on Thursday. We had no contact whatsoever from her. She had rent ar¬rears, she had problems with her housing ben¬efit, she’d been given notice to quit, which is 2 months. If she had come to us 2 and half months ago we could have looked at her income, made sure she was getting right rate, why has hous¬ing benefit got into a mess. Child credit had got into mess and we could have sorted that out for her. We don’t want people to be home¬less, would rather people had a roof over their head.”(Housing Advice Officer)

14. CAP don’t ring people from landlines as the

18. “I was mortified, couldn’t deal with it, couldn’t

assumption is that it’s a creditor so the call isn’t answered, and when they go round to people’s houses for pre-arranged appointments often find that people don’t answer the door. They think this is due to the person not wanting to face up to the reality of their debt

15. Of people who sought help from Christians Against Poverty, 72% had sacrificed meals due to debt, and 21% said they missed meals regularly 16. “Very often with the backdated claims you have people saying ‘I didn’t know I could claim’ . Along with that you have people saying ‘I thought I’d get another job’. Perhaps a sense of false opti¬mism that they think they are going to find work. Half a million don’t claim straight away. People are seeking help but they are seeking help by borrowing money, either off a relative or door¬step lender or payday loan or something like that. They don’t think or know about us.” (Hous¬ing Benefit Technical Assessor) © FutureGov 2014

answer the phone, didn’t know what to do. Went to the CAB and felt like a leper. Terrible. The information was good. They couldn’t support me as much as I needed it really. I never claimed any benefit. I was mentally unable to deal with it and because I’m not silly, I’m quite an intelligent person, they didn’t offer me the case work where they would write letters for me. I had to do it all myself and didn’t because I wasn’t able to” (Ella) StepChange Debt Charity say out of 950 clients surveyed, over 40% had struggled with mounting debts for a year or more before seeking help. Research on the debt problems experienced by working households found that although people tried to deal with their financial difficulties in a number of different ways, they continued on a downward slope to unmanageable debt. Very often these responses involved more borrowing as people held on to the hope that they could sort it out themselves or ‘because they were too embarrassed to admit otherwise’.

19. http://www.digitalbuzzblog.com/infographic2013-mobile-growth-statistics/