It is a well-worn cliche that businesses talk about how they want to build “trust-based relationships” with their customers, of how they want their clients to see an organization as ethical and values-driven. In many cases the cliche is not, however, just a lot of marketing hype — or at least it shouldn’t just be marketing hype. Fairly routine but important cases includes the processes that creates medicines, manages air traffic, and makes sure that traffic signals work properly.
Banks have long had a special role in communities as deposit-taking institutions. Clients setting up trusts are placing a great deal of trust that the bank will act responsibly and reliably.
Throughout developed economies, as more and more people live longer and, in some cases, out-live their partners and spouses, there may be a growing societal as well as financial role leading banks might play, which is as a line of defence for their clients to avoid not only financial fraudsters but also perhaps to assist in spotting customers who might need assistance from properly designated healthcare professionals.
Recently The Economist covered this intriguing overlap of traditional business with social safety net:
Studies suggest financial decision-making ability tends to reach its peak in a person’s mid-50s, after when deterioration sets in. “Age-friendly” banks are beginning to learn how to protect vulnerable older customers.
The most dramatic forms of age-related mental deterioration are neurodegenerative diseases, like Alzheimer’s. But even “normal” ageing can cause cognitive change. Financial-management skills are often early casualties, because they demand both knowledge and judgment.
It is difficult to monitor financial abuse, because victims rarely report it. True Link Financial, a financial-services firm, estimates annual losses in America from financial exploitation and abuse of the elderly at between $3bn and $37bn. In Britain the Financial Conduct Authority has issued warnings about investment-fraud schemes, coaxing the elderly into trading their savings for shares, wine or diamonds (which never arrive).
The older brain seems more susceptible to “too good to be true” scams, from lotteries to dating schemes. According to the “Scams Team” at Britain’s National Trading Standards, a consumer-protection body, the average age of victims of mass-marketing scams is 75. Louise Baxter, the team’s manager, says cognitive decline in older people is a risk factor that criminals exploit, and the dangers are likely to rise in tandem with the incidence of dementia.
Banks have been slow to respond, at first seeing these risks as purely a matter for customers. (As one manager puts it, they “have the liberty to make dumb financial decisions.”) Most “age-friendly” measures have focused on physical limitations (such as talking ATMs for the blind) or helping people get online. However, many banks are recognising cognitive decline as their problem, too. Barclays, a British bank, uses voice recognition to help customers who have trouble with passwords. Banks are training staff in how to spot dementia and signs of financial abuse. First Financial Bank, in America, gives staff who uncover a scam a “Fraud Busters” pin. And better ways to identify fraud are popping up: algorithms can help staff detect changes in spending patterns. Barclays used data from old cases to pinpoint 20,000 high-risk customers, whom it monitors and advises.
The trickiest issue for banks, ethically and legally, is how and when to act on concerns over a client’s ability to manage money. The last-resort measure, most commonly used for the incapacitated, is a power of attorney, usually given to a family member chosen in advance. But this can put people at risk of opportunistic relatives. It may also curtail autonomy too severely. Banks are experimenting in this grey area, for example by giving relations “read-only” access to accounts, so they can monitor payments, or by allowing the bank to delay a payment and contact advisers if it is worried. A limited form of power of attorney, with authorisation for only certain payments, is also emerging.
Much of the financial damage done by cognitive decline results from late detection of problems. A decline in someone’s financial skills can be an early warning of dementia or other problems. Jason Karlawish, an expert on Alzheimer’s at the University of Pennsylvania, thinks banks—and their technology—are uniquely placed to identify older people who are at risk and refer them to doctors or social workers. He coined the phrase “Whealthcare” to describe how looking after people’s money can give insights into their health. “If you do it right, I think customers will like it,” he adds. “Nobody wants to lose their money and certainly not their brain.”
Trust is hard to earn and easy to lose but companies that can earn and maintain incredibly deep levels of trust and discretion might find a well-paying market beyond the traditional multi-millionaires and their estates.
Might Artifical Intelligence (AI) agents, augmenting people, be a way to watch over the interests of clients? A properly secure and incorruptible AI system might serve to both act as a line of defence as well as a watcher of the people involved.
“Gort, Klaatu barada nikto.”