UK Fintech News Roundup: The Latest Stories 11/01

Every Wednesday we delve into the latest fintech updates from across the UK. This week brings updates from NatWest, NerdWallet, CMC Markets, Prograd and more.

Children in the UK have ambitious savings targets for 2023

Prepaid debit card and pocket money app NatWest Rooster Money has revealed that thousands of children across the UK are aiming to save an average of £697.11 each.

The data from the app highlights that across all 6 to 17-year-olds in the UK, children can save the equivalent of £6.7 billion. NatWest also released data on what children using the app are saving for. The most popular goal created on the Rooster Money app in December 2023, video games and gaming accessories, accounted for a goal of over £191,000.

Will Carmichael, managing director of NatWest Rooster Money, gave his view on the data. He explained: “The behaviors and beliefs that we establish around money in our early life are often the ones that stay with us into adulthood. What is really striking is the size of some of the goals being set. They average almost £700 per child – reflecting the high ambitions of children when they are given the chance to set goals for themselves.”

Concern for small and medium-sized businesses as Hunt plans to cut energy support

Chancellor of the Exchequer Jeremy Hunt is set to reduce energy support for businesses, and industry leaders explain that the support was “unsustainably expensive”.

The news that the existing package, worth £18bn over the next six months, is being reduced to just £2.5bn with no plans to limit fuel caps has raised serious concerns for growing numbers of businesses struggling to meet their energy costs.

Chirag Shahmanaging director i Nucleus Commercial Finance, commented on the news. Mr Shah said: “Support for business has and remains in short supply. Extending the previous £18 billion support package would have been a real lifeline for struggling businesses this year.

“Cutting this support to just £2.5bn for the next 6 months risks leaving the UK’s income earners high and dry as the recession bites. Challenges like this only highlight the importance of the commercial financial pipeline. It is important that businesses, of all sizes, have access to the lending they need so they can focus on productivity and seize growth opportunities as they arise in this tougher climate.”

Are women more likely to use BNPL schemes?

Women (20 per cent) are almost twice as likely to owe money to BNPL schemes as men (11 per cent), according to ‘Household debt report‘ by personal finance experts at NerdWallet.

NerdWallet findings also revealed that 83 percent of women and 62 percent of men admit to owing up to £5,000 in debt. But men (13 per cent) are more likely than women (6 per cent) to owe larger amounts of between £5,001 and £10,000.

Despite these findings, the report also found that men are much more reluctant to share debt amounts. 20 percent of the men preferred not to disclose how much debt they have. Meanwhile, only eight percent of women would not disclose these amounts.

Brian Horne, personal finance expert at NerdWallet UK, stressed the need for care when using BNPL schemes. Horne said: “It’s important to make sure you can afford repayments before taking out a credit agreement. Borrowers who manage their repayments and pay off their debt on time are unlikely to run into problems. However, buyers who purchase more than they can reasonably afford may be putting themselves at risk, especially as the cost of living continues to rise.”

Best UK cities for new businesses revealed

The data from the study revealed that Reading has the lowest percentage of closures, with just 0.13 per cent of businesses launched between December 2017 and December 2022 going into liquidation.

Reading saw 6,877 reported company openings, with only nine reported closures. Stoke-on-Trent, Plymouth, Cardiff and Edinburgh made the top five in the study by the finance company CMC Markets.

Overall, Southampton took the place as the statistically worst city for a successful business. With 5,337 reported openings and 162 reported closings, the city saw a total of 3.04 percent of businesses in liquidation.

Gen-Z financial platform looks to promote financial inclusion with investments

London-based Gen-Z financial platform Prograd has raised £2 million in seed investment. The platform aims to support young people to better understand finances.

The investment will help expand the team’s marketing and development capabilities. Prograd also looks to improve its digital footprint, release an app and improve its algorithm products.

Ethan Fraenkel, CEO and co-founder of Prograd, commented on the investment. He said: “We plan to educate Gen-Z and help them achieve their financial goals. This is without financial jargon and in the most cost-effective way. We also believe that one of the biggest problems in consumer finance right now is the lack of personalization and financial competence There is also a big difference between the banks, what the customers want to do and how the two parties communicate.