Banks Step Up Financial Management Support for Brits as Cost-of-Living Crisis Continues
Financial institutions are ramping up data-driven financial management support, as UK consumers grapple with the rising cost of bills and goods.
That’s according to new research by the market leader in open banking, Tink, which finds that over four in ten banking executives believe they have a responsibility to help customers better manage their finances during the cost-of-living crisis. A further 45% surveyed believe they have a responsibility to ensure their products and services are inclusive and accessible.
Beyond being the “good” thing to do, banks also recognise the business benefit in supporting their customers. Over half (56%) surveyed agree there is a commercial rationale for helping people better manage their finances during the cost-of-living crisis. For instance, 42% say it reduces customer churn, 42% believe it drives retention and loyalty and 36% say it lowers customer acquisition costs.
Awareness and appetite for financial management tools growing as consumers look to banks for tailored support
Encouragingly, from the survey of over 2,000 UK consumers, around half (49%) reveal that they trust their bank more than any other financial services provider. However, just over a quarter (27%) currently feel their bank is helping them through the cost-of-living crisis by providing them with tailored financial support, and over a third (37%) would like their bank to do more to help them manage their finances.
When asked what specific tools they are aware of and would like to use, perhaps unsurprisingly it was budgeting tools to help navigate the rising cost of living that topped the wish list:
- Budget management tools (e.g. setting up and managing budgets to limit your spending) – 31%
- Savings management tools (e.g. setting up and managing saving pots) – 30%
- Spending categorisation tools (e.g. categorising spending into groups) – 28%
But the potential of data-driven financial services has not yet been maximised by all
Despite this, some consumers remain in the dark about which financial management tools are on offer in their digital banking app. For instance, an estimated three in ten (30%) are unaware if their bank offers budget management tools, and 35% are unaware if their bank offers categorisation of their transactions.
The research also reveals the top reasons preventing a minority of banks from investing in new data-driven services, including not seeing them as a competitive differentiator for the business (31%), and a lack of skills and resources to develop these products internally (27%).
But even with this lingering hesitancy amongst some banks, the majority are on the front foot and seizing the opportunity to develop and invest in these services. Of those surveyed, 62% are currently working on or would like to be able to offer budget management tools to customers, and 63% for transaction categorisation.
The forward-looking banks currently offering these services are already reaping the benefits. Half (50%) surveyed reveal data-driven financial services have delivered commercial benefits for their business, while another 50% also say it has helped them improve customer experience in particular. Almost half (47%) of the respondents agree that data-driven financial services have helped them better support their customers during the cost-of-living crisis.
The role of fintechs in helping bring these products to market can’t be understated – an estimated 47% of banking executives agree that fintech partnerships are helping them offer new tools to better support customers during the cost-of-living crisis.
Tasha Chouhan, UK & IE Banking Director at Tink, commented on the findings: “As UK consumers brace themselves for ongoing financial difficulty, it’s encouraging to see banks recognise both the responsibility and opportunity in offering data-driven financial services to help consumers manage their finances during this challenging economic time.
“To pick up the pace, financial institutions should continue to invest in building these services, alongside raising consumer awareness of the tools already on offer. Partnerships with fintechs specialising in money management tools are one way institutions can bring data-driven products to market at scale, taking the friction out of integrating them into their core offering.”
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