Britons turn to fintech to tackle cost-of-living crisis

Financial stress has increased and people are less confident about their relationship with money than last year, but fintech continues to help consumers understand their finances, Plaid research reveals.

Image source: Lensi Photography/Starling Bank.

In the midst of one of the most tumultuous times in Parliament’s history, it can be hard to think back to just a few months ago when then Prime Minister Boris Johnson had just stepped down.

But even then, when we had no idea of ​​the chaos to come – a prime minister who “doesn’t hide under a desk” to avoid parliament, four chancellors in four months, a crashing pound and a cost-of-living crisis – it is clear that Britons felt the economic squeeze.

In a survey of around 4,000 people by open banking network Plaid in July, 83 per cent of people cited the cost of living as their main financial concern.

41 percent said they have little or no confidence in the economy and 62 percent said their financial stress has increased since last year.

It’s hard to believe that confidence could have grown since then.

In fact, the number of people who said they felt secure about their money dropped from last year to this year, from 77 percent to 61 percent.

But one thing respondents across the board confirmed is that fintech has helped, with 41 percent of respondents saying fintech enables them to understand their finances so they can better manage their money.

And over the next six months, UK 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,” said Kat Cloud, head of Plaid UK.

“When people use fintech, they get clear benefits in terms of time and money saved, and increased control, which is precisely 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 empower the fintech industry 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 shows that consumers have shown an appetite for these tools, so the innovation must continue.”

According to the third annual report of The Fintech Effect, 84 percent of UK consumers use fintech to manage their money.

More than half said it saves them time – 56 percent – ​​and 49 percent said it makes them feel more in control.

With financial stress looming — 62 percent said it had increased since last year — it’s more important than ever for people to have the tools they need to get through the uncertain times.

While the percentage of people using fintech tools in both the UK and US overall fell 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) used digital financial tools.

This decline is mainly a result of baby boomers returning to traditional banking, according to the report, while increased adoption and acceleration has largely continued in younger generations, particularly in Gen Z who have risen from 87 percent to a massive 93 percent.