Computer says no: the challenges of onboarding into the UK financial system

When my wife and I made the decision to relocate to the UK from Lima, Peru, numerous concerns flooded our minds. How long would it take to receive a response for her visa? Could we successfully secure a flat amidst the London housing crisis? And where would we live in the meantime? Little did we anticipate, however, that sorting our finances would prove to be the most stress-inducing aspect of our entire international move.

Our first hurdle was figuring out a way to transfer our savings from our Peruvian bank accounts to the UK. A quick Google search revealed that opening a bank account required British residency. To provide some background, British residency is obtained after residing in the UK for ninety consecutive days – that is a significant period without a bank account, which wasn't feasible as we needed a way to cover living expenses and receive our salaries.

Looking for alternatives, we reached out to friends who had relocated to the UK and proposed the idea of using a foreign exchange and remittance service. That turned out to be our lifesaver, but the experience did not prove to be without friction. The first step was assessing which service to use by checking Trustpilot reviews, something that only fed our anxieties. We came across stories of people whose life savings had been retained by these companies without any sort of explanation, leaving them stranded. We weren't sure if these anecdotes were true, but they certainly ignited our concerns, as we wanted to avoid the same thing happening to our own savings. 

We opted for what seemed like the most trustworthy remittance service and made the transfer through our Peruvian banks. In-app messages said funds would take a week to process and appear as British pounds on their app. We had to embrace the uncertainty of years worth of savings being ‘in limbo’, as we waited for our funds to arrive. The transfer got extended for another week, without any explanation as to why, but it did eventually come through.

Once we hit the 90-day mark living in the UK, it was time to open a bank account. I opted for one of Britain’s biggest online banks and applied for an account using their app. There were no formal mechanisms to provide my Peruvian financial history when applying. After submitting my application, I was asked to wait up to two weeks, only to get rejected without an explanation. I found that banks will usually try to protect themselves from ‘unsuitable clients’, rather than helping potential new customers to prove their eligibility. 

Did this lead to a bad financial outcome? I felt quite distressed after the rejection and remember constantly asking myself what had raised a red flag, and whether this rejection would hurt my chances when applying to other banks. I was luckier with the second bank I approached – I got accepted in seconds when I applied online to an (ironically) brick-and-mortar FTSE 100 bank. 

In my experience, banks expect you to be ‘transparent’, but they’ll reject you if they see any hints that you could be an unfit proposition. On the other hand, there is little transparency on their part after rejecting your application. Why was my account application denied? What steps could I take to avoid getting rejected in the future? I was left asking Google because the bank didn’t provide me with any answers.

The experiences I have just shared caused restlessness for some time but we were ultimately able to establish ourselves financially in the UK. However, there are most likely still numerous prospective customers that are attempting to engage with your product or service but are hindered by various obstacles. First impressions matter, so what you say and do in these situations is crucial. Because an individual does not currently meet the criteria to become your client, does not mean that they won't fulfil the necessary conditions in the near future. And the business opportunity is clear: in 2022, there was an astonishing net migration of 606,000 individuals. This presents an enormous pool of potential clients with whom you could establish valuable relationships. 

Needless to say, there are many opportunities to improve outcomes for migrants. Here are some ideas:

• Let clients know what is happening every step of the way when moving their money to the UK – this is especially important when the process takes weeks, rather than hours. 
• Support clients to demonstrate their financial history. While a credit score from elsewhere may not be "legally" recognized, it can still provide a reliable indication of an individual’s financial profile. 
• Provide actionable next steps after rejection. Financial institutions will sometimes have to reject applications for multiple reasons. If this happens, provide individuals with information on next steps they could take.

It’s important to mention that obstacles will be more significant when those pursuing financial inclusion are refugees seeking asylum. The vast majority of recently-arrived individuals don’t always have legitimate identity documents, which makes it incredibly difficult for the financial sector to provide services to them in accordance with established protocols and regulations. Opportunely, the United Nations High Commissioner for Refugees is already looking into solutions for these situations.

At cxpartners, we specialise in qualitative research and user-centred design — this means we can help you identify and understand the different obstacles marginalised people might be facing when trying to engage with your product or service. From this understanding, we can then design better experiences that comply with regulation and lead to better customer outcomes.

Keen to find out more? Reach out to kevin.armstrong@cxpartners.co.uk.