Consumers across the UK who use digital financial management tools report saving an average of £37.08 per month, or £445 per year, compared to before the launch. Today, 7.6 million Britons already use digital financial management tools, meaning this group collectively saves up to £3.38 billion per year.
If we scale up this approach and everyone in the UK over the age of 16 starts using digital tools to manage their finances, an additional £24.5 billion could potentially flow into consumers’ wallets every year.
This is according to a new study by Tink, a market-leading platform for data enrichment and payment services.
Consumers are using digital financial management tools to improve their financial health during the cost of living crisis
Tink’s research comes at a time when an estimated three-quarters (75%) of consumers surveyed across the UK say they are careful about what they buy because of the high cost of goods.
When asked about their personal financial goals for the coming year, almost half of consumers surveyed said they wanted to build up savings (49%). More than a quarter of respondents wanted to cut unnecessary spending (27%) or build an emergency fund (26%).
It’s no surprise, then, that consumers are using the money saved through digital financial management tools to achieve these personal financial goals. Over a third (39%) of respondents used the extra funds to increase their savings contributions and nearly one in four (23%) paid off debt.
This suggests a clear link between the use of these services and improved financial health.
Digital financial management tools promote engagement and loyalty in banks
Banks looking to gain a competitive advantage can capitalize on clear consumer demand for digital financial management tools. Half of consumers surveyed (50%) want their banking app to help them track subscription spending, and over a third (37%) want their bank to provide better visibility into their finances.
The survey also suggests that some consumers are more likely to consider switching banks to gain access to better support and tools to manage their finances. Over a third (36%) of respondents said they would switch to another bank if it offered them tailored support to help them achieve their financial goals. A similar number (32%) would switch to another bank if it offered them tools to track and manage their spending.
In addition to increasing loyalty and engagement, respondents to a separate Tink survey of bank managers reported other benefits from providing these services. Almost half (46%) of banks that offer digital financial management tools reported seeing increased “top of wallet” behavior among consumers – such as greater card usage and higher payment volumes.
Jack Spiers, UK&I Banking & Lending Director at Tink, commented: “It’s clear that financial management tools can make a significant difference to a consumer’s finances. In addition to improved financial health, our research shows consumers have also reported a wide range of wellbeing and lifestyle benefits, from lower stress levels to increased happiness and less time spent managing money.
“At the same time, there are clear benefits for banks that offer these tools to their customers. In a competitive retail market, banks have the opportunity to differentiate their offering and meet changing consumer expectations by helping their customers better manage their finances.”
