Cloud banking company Soar recently chose to integrate a benefits calculator from Inbest to alert loan applicants of potential benefits and help them to track their entitlements.

Edinburgh-based Inbest’s feature will notify Soar’s clients about their potential benefits entitlement when they make a loan application. Soar says it also plans to embed the benefits calculator on its banking apps to help customers manage their benefits and ensure they are always claiming the right amount.

Not only does the partnership add value to Soar’s platform, it also helps reach people who have the most to gain from Inbest’s calculator.

For people with limited financial literacy, simply being aware of the range of benefits available to them can be challenging. Navigating the process can be even more difficult.

Inbest’s calculator has joined the solutions created by fintech companies in recent years to make finance more accessible, especially for vulnerable people.

DIGIT spoke with Inbest co-founder, Manuel Peleteiro, to explore how the startup supports benefit seekers to overcome the challenges they face.

“The benefit system works well for people who are aware of their benefits,” Peleteiro explained. “The challenge is for people who are not aware of their benefits.”

“So, we partner with platforms that offer complimentary services for financially vulnerable people and embed the benefits calculator into their solutions.”

In addition to its partnership with Soar and similar platforms, Inbest works with employee wellness solutions and payroll companies. This uses their data to identify and notify people whose income qualifies them for benefits.

A similar system sees the company work with banks to use information on their clients’ income and expenses to estimate the benefits the person could receive.

“This is the main objective,” Peleteiro said. “Partnering with companies that offer complementary products or services so that we can then embed our benefit calculator as a feature.”

Missing Benefits

In the UK in 2018/19, almost 8 million low-income households were missing £16 billion in means-tested benefits. The DWP estimates that 44% of those eligible for means-tested Job Seekers Allowance, 16% of those eligible for means-tested Employment and Support Allowance, and 23% of those eligible for Housing Benefit did not claim them.

According to Peleteiro, 56% of unclaimed benefits are because people believe they are not eligible, due to having a job, savings, or earning too much.

“There’s this big misconception that benefits are only for unemployed people. They are also for people on low incomes, depending on your job or household. And these people are missing out because they are not aware.”

However, even once people are aware of the benefits available to them, there are still barriers to overcome.

“The application process is so overwhelming people sometimes don’t want to apply,” Peleteiro said.

“In the UK, there are about 50 types of benefits across the central government, Scotland, and local authorities. And their relationship is complex, and these benefits interact with each other.”

“In some cases, if you get one benefit you cannot get money from another benefit, and if you get money for that benefit, you can get money for another. So, it’s complicated and people struggle to get their heads around it.”

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This complexity is responsible for 44% of unclaimed benefits, Peleteiro explained. And the problem is exacerbated among people with limited access to technology, those who do not speak English as a first language or people with disabilities.

“You have to fill out around 60-70 pages full of jargon. And then when you apply for the benefits, you have to go through the assessment process, and that is challenging – you need to use the right words and you are under severe stress.”

“Another thing is that benefits do not stand still,” he added. “You need to continuously monitor your personal financial situation because your benefits depend on it.”

“So, if you fail to update your finances, if your income increases, then the benefits you receive will decrease and if you don’t update your situation with the Department of Work and Pension you may be exposed to liability.”

In addition, Peleteiro said that the long-standing stigma attached to claiming benefits puts people off applying for the support they are entitled to.

“The benefits are made available to you because of your situation,” he said. “You should use them because if you’re eligible it means you need them.”

Fintech’s Role

Fintech companies have a role to play in overcoming these financial challenges. In particular, Peleteiro pointed to the use of predictive models to identify people who are vulnerable or whose spending habits may make them vulnerable in future.

In addition, creating tailored customer journeys can make financial services more accessible.

Peleteiro touted groups like Passion4Social, which creates widgets to help people with disabilities read webpages, or Signly, which adds sign language videos to websites. This is particularly useful for people with disabilities, or with limited English.

Crucially, Peleteiro explains, an important aspect of partnerships such as these is that they help bring new perspectives to the table. By taking advantage of Scotland’s tech ecosystem, such as the Fintech Scotland Consumer Panel, insights come from beyond the tech industry’s typical well-off university graduates.

“We’ve never claimed benefits, we live in good neighbourhoods, we have good social networks, so we are blind to these struggles,” Peleteiro explained.