Lloyds Banking Group (LBG) today won the ‘Innovation in the delivery of financial products award’ at the 2015 British Bankers’ Association/Institute of Financial Services University College Financial Innovation Awards for its overdraft eligibility checker.  The overdraft eligibility checker is a new online tool that allows customers to check their eligibility for a range of personal current accounts (PCAs) and overdrafts in less than two minutes without affecting their credit score.

The new tool was the first of its kind to be offered by a UK bank when it launched in July 2015, and is available on mobile devices across Lloyds Bank, Halifax and Bank of Scotland.  To use the tool, customers enter some limited personal information into an online form.  The tool then conducts a ‘soft’ credit search to confirm which PCAs would be available, as well as an estimate of the overdraft limit likely to be offered.  A ‘soft’ credit search means it does not appear in any external credit reference information.

Switching PCAs is an issue currently being investigated by the UK Competition and Markets Authority (CMA). Although it is now much easier to switch PCAs using the Current Account Switching Service, some customers may be deterred from shopping around because of uncertainty about their eligibility for an overdraft with their new provider and concern about harming their credit rating by applying for credit.  The CMA has proposed that tools equivalent to LBG’s overdraft eligibility checker should be made available by all providers.

LBG has also run large scale behavioural trials on a suite of other innovations over the course of the last year exploring customer engagement in retail banking.  Frontier (Europe) worked with LBG on all of these innovations, including the eligibility checker, from initial concept and design through to field deployment, data analysis and interpretation.

Frontier (Europe) advises LBG on regulatory strategy and behavioural economics, including the CMA investigation and the development of the eligibility tool.

For more information, please contact Goran Serdarevic on g.serdarevic@frontier-economics.com, or call 020 7031 7000.