Rising financial pressure has resulted in a decline in consumer confidence in their relationship with their money over the last year. According to recent studies, however, fintech is continuing to support people in understanding their finances.
In a particularly disruptive political period, with a rapid drop in the sterling and a rising cost-of-living crisis, it’s clear that many people are feeling the economic squeeze.
In a recent survey delivered by the open banking network Plaid, over 80% of people highlighted the cost of living as their primary economic concern. Over 40% of people said they have very little or no confidence in the economy, and over 60% stated that their financial stress had increased in the last year.
Since the survey, confidence levels have declined further, with customer relationships with their finances decreasing from 77% to 61% in the last year. One particular area that respondents highlighted is that fintech has helped with recent challenges, with over 40% of people saying that fintech has enabled them to understand their finances and their understanding of managing their money. The findings suggested that British customers expect to maintain 72% of their finances via digital over the next six months. Kat Cloud, the UK policy lead at Plaid, explains that new technology like budgeting and saving apps to automated bill payments and fintech has established a clear and consistent impact.
When people use fintech, they create clear benefits of saved time and money and improved control, which are key reasons why the adoption of fintech services continues to rise. With the current economic uncertainty, fintech products provide a vital lifeline, and open banking providers must adapt to open finance to maintain momentum with continued progress.
Open finance enables fintech to generate new digital finance user cases that meet customer needs, from improved debt management tools to better pension management. Cloud explains that their research suggests that customers have shown an increased demand for fintech tools, so innovation must continue.
According to the latest annual report on the Fintech Effect, over 80% of UK consumers use fintech to manage their money. Over half of respondents believe it saves them time (56%), and 49% said fintech makes them feel more in control.
With financial challenges on the rise, with over 60% saying it had increased since last year, people must have the resources they need to navigate these disruptive times.
While the overall figures of people using fintech tools across the UK and US declined ever so slightly in 2022 compared to 2021, the figure is considerably higher compared to 2020. The decrease was reportedly a result of baby boomers returning to conventional, in-house banking services. Fintech adoption and acceleration have continued to rise in younger generations, particularly in Gen Z, which has increased from 87 to 93%.
