Financial stress has increased and people are less confident in their relationship with money than last year, but fintech is continuing to help consumers understand their finances, Plaid research reveals.
In the midst of one of the most tumultuous times in parliamentary history, it might be hard to think back to just a few months ago when then-Prime Minister Boris Johnson had just resigned from his post.
Yet even then, when we had no idea of the chaos that was to come – a Prime Minister “not hiding under a desk” to avoid Parliament, four Chancellors in four months, crashing sterling and a cost-of-living crisis – it is clear that Brits were feeling the economic squeeze.
In a survey of around 4,000 people conducted by open banking network Plaid in July, 83 per cent of people listed the cost of living as their main economic concern.
41 per cent of people said they have little to no confidence in the economy and 62 per cent said their financial stress has increased since last year.
It is hard to believe that confidence could have grown since then.
In fact, the number of people that said they felt confident in their relationship with their money decreased from last year to this year, from 77 per cent to 61 per cent.
But one thing that respondents across the board confirmed is that fintech has helped, with 41 per cent of respondents saying that fintech enables them to understand their finances so they can better manage their money.
And, over the next six months, British consumers expect to manage 72 per cent of their finances digitally on average.
“From budgeting apps and savings platforms to automated bill payments, fintech is having a clear and consistent impact,” Plaid UK policy lead Kat Cloud said.
“When people use fintech, they gain clear benefits of saved time and money, and increased control, which is exactly why adoption is persistent.”
Given the current economic uncertainty, fintech tools will provide “critical lifelines”, Cloud said, but open banking must transition to open finance to keep up with the momentum.
“Open finance will give the fintech industry the ability to deliver new digital financial use cases that better meet people’s needs, from pension management to better debt management tools,” she said.
“Our research proves that consumers have shown an appetite for these tools and so innovation must continue.”
According to the third annual report of The Fintech Effect, 84 per cent of UK consumers use fintech to manage their money.
More than half said it saves them time – 56 per cent – and 49 per cent said it makes them feel more in control.
With financial stress on the rise – 62 per cent said it had increased since last year – it is more important than ever for people to have the tools they need to get through the uncertain times.
While overall the percentage of people using fintech tools across both the UK and the US dipped slightly in 2022 compared to 2021 – from 88 to 80 per cent – this figure is up significantly from 2020, where just over half (58 per cent) were using digital finance tools.
This decrease is mainly a result of baby boomers returning to traditional, in-person banking, according to the report, while increased adoption and acceleration has largely continued in younger generations, particularly in Gen Z which has risen from 87 per cent to a massive 93 per cent.
21 March 2023
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