Plaid report shows that 84% of UK consumers rely on fintech to manage money

US-based Open Banking operator Plaid has published its Fintech Effect report which shows that 84% of UK consumers will use fintech for money management by 2022.

Examining how consumer financial behavior is influenced by technology, the third annual report shows a broad adoption rate of fintech across demographic groups, with consumers looking to tighten their finances against the cost of living crisis as a backdrop.

Existing users’ reliance on fintech apps is fueled by these financial concerns, while a new wave of fintech users managing their finances digitally for the first time is ushered in. Britons expect to manage around 72% of their finances digitally in the next six months, up from 67% today; those who do not use fintech as of now expect to manage 58% of their finances digitally in the same period, up from the current 52%.

Unlike last year’s research, which showed how consumers developed new habits after the COVID-19 pandemic, this year’s report shows that these habits have carried over beyond the pandemic. When it comes to the benefits of fintech as reported by consumers, 41% have stated that they are able to have a greater understanding of their spending, thus being able to better manage their money. More than half (56%) reported that fintech helps them save time, while 49% said it helps them gain more control over their finances.

Findings on consumer financial well-being

Consumer financial stress is on the rise, with 62% of consumers saying this has increased since 2021, with 83% citing the rising cost of living as their top concern. The economic backdrop, with rising interest rates and inflation, is affecting people’s confidence when it comes to their relationship with money, which has decreased to 61% in 2022 from 77% in 2021; in addition, a worrying 41% of consumers report that they have little or no confidence in the economy.

However, the report highlights opportunities to improve consumers’ financial well-being; about. three quarters of consumers (74%) have stated that they need their bank to be able to connect to the apps and services they want to use, while 48% have expressed a desire to see their bank partner up with more fintech companies. Open Finance is seen as the next step in UK consumers’ understanding and management of their holistic financial lives, due to its enhanced linking of financial data that includes pensions, savings and investments.

Company representatives have stated in their press release that fintech’s impact is clear and consistent. Ranging from budgeting apps and savings platforms to automated bill payments, fintech allows people to have clear visibility into money and time saved, while also giving them increased control, benefits that explain usage rates. However, in today’s economic climate, there is a need to move from Open Banking to Open Finance to improve customer access to a wider range of their financial data. Open Finances is believed to give the fintech industry the opportunity to deliver new digital financial use cases to better meet customer needs, such as pension administration and improved debt management tools.