Behavioural science: the missing data layer in the CII’s vulnerable customer guidance

By Greg B Davies, Head of Behavioural Finance, Oxford Risk

The Chartered Insurance Institute’s (CII) recent guidance on identifying vulnerable customers puts its finger on the financial services industry’s biggest implementation barrier under Consumer Duty: firms lack a consistent, behaviourally grounded way to diagnose vulnerability. The challenge is not the absence of data per se, but the absence of a structured, evidence-led diagnosis that can be applied consistently across customers and channels.

For the FinTech platforms and digital wealth providers poised to help fill this gap, it represents both a compliance challenge and a competitive opportunity. Embedding behavioural science directly into technology infrastructure is a necessary component for FinTechs seeking to support financial services firms and, ultimately, their customers.

Traditional data systems can’t solve for vulnerability

Traditional financial data are fairly limited in the insight which can be drawn from them. Broadly, they tell you what customers own and how they transact. What they cannot tell you is why two customers with identical portfolios may have entirely different capacities to process information, make decisions under pressure, or stay engaged during market volatility.

The CII guide’s focus on capability, comprehension, and resilience points directly at this behavioural dimension of vulnerability, but most firms have no systematic way to measure it.

This is where behavioural science, embedded within FinTech platforms, comes in. Traits such as Composure, Confidence, Impulsivity, and Familiarity Preference can be assessed quickly and scientifically through digital tools. These psychological measures explain why some customers struggle to engage with complexity, articulate their needs, or navigate decisions during periods of stress. Without this layer of insight, Consumer Duty support risks being well-intentioned but ineffective.

Consistency requires technology

The CII is right to call for evidence-based, repeatable processes. Human judgment is vital for empathy and support, but it varies too much to deliver a consistent diagnosis on its own. Different advisers can, and often do, reach different conclusions about the same customer. The same adviser can vary from day to day. This inconsistency undermines fair outcomes. Importantly, this variability is not a training failure; it is a well-documented feature of human decision-making, particularly in complex and emotionally charged contexts.

Behavioural suitability technology addresses this directly, supporting both diagnosis and prescription in different ways. At the diagnostic stage, it enables consistent, evidence-led assessment of behavioural vulnerability, risk capacity, and capability needs. At the prescription stage, it supports advisers through personalised communication, engagement, and behavioural interventions that help customers become emotionally comfortable with suitable solutions. Prescription remains adviser-owned, but it is increasingly technology-supported, ensuring that recommendations are not only suitable in theory, but workable in practice.

Dynamic monitoring

While behavioural traits such as Composure, Confidence, and Impulsivity are relatively stable, vulnerability itself is not. Customers move in and out of vulnerable states as circumstances and resilience change. The CII guide emphasises this dynamic quality, but traditional monitoring relies on transactional flags or periodic reviews that catch problems too late.

Behavioural monitoring does not require repeatedly re-measuring personality; instead, it involves tracking how changing circumstances and observable behaviours interact with stable traits to create periods of heightened vulnerability, often well before problems surface in portfolio behaviour or client conversations. This early warning capability is where behavioural finance becomes operationally powerful for FinTech firms. It transforms vulnerability identification from a compliance checkbox into a proactive customer protection mechanism.

Building behavioural data into core systems

For wealth tech platforms and digital banking providers, integrating behavioural assessment is not an optional enhancement. It is becoming a core component of meeting Consumer Duty expectations at scale. The technology exists to embed these capabilities into onboarding flows, periodic check-ins, and continuous monitoring frameworks.

The implementation challenge is not technical complexity. Behavioural assessments can be completed in minutes and integrated via standard APIs. The challenge is institutional: recognising that financial personality data are as essential to understanding customer needs as transaction history or asset allocation preferences.

Firms that build this capability now will be better positioned not just for regulatory compliance, but for competitive differentiation. Understanding behavioural vulnerability allows for more precise customer segmentation, better-targeted communications, and intervention strategies that genuinely improve outcomes.

Putting principle into practice

The CII’s guidance and behavioural FinTech are strongly aligned. The guidance sets out the operational expectations, while behavioural science and technology provide the means to deliver them consistently and at the necessary scale. Behavioural personality traits are one of the most reliable ways to identify vulnerability early and support customers in a way that is fair, effective, and sustainable.

For FinTech firms looking to meet both the letter and spirit of Consumer Duty, the challenge is how quickly they can build behavioural data into their core infrastructure.