Plaid has published its third annual report entitled The Fintech Effect, revealing that 84% of UK consumers are using FinTech to manage their money in 2022, with broad adoption across demographic groups.
The report, which examines how technology is impacting consumer financial behaviour, finds persistent mainstream FinTech adoption as consumers seek to get a tighter grip on their finances against the backdrop of the cost of living crisis.
Financial concerns are increasing existing users’ reliance on FinTech apps, as well as ushering in a wave of new users managing their finances digitally for the first time.
Over the next six months, UK consumers expect to manage 72% of their finances digitally on average, up from 67% today.
Even those not currently using FinTech expect to manage 58% of their finances digitally over the next six months, up from 52% today.
While last year’s research demonstrated that consumers developed new habits as a result of the Covid-19 pandemic, this year’s report reveals those habits are here to stay beyond the pandemic.
Among the benefits to consumers, 41% said that FinTech enables them to understand their spending so that they can better manage their money.
More than half (56%) said that it saves them time, while 49% reported that it makes them feel more in control of their finances.
Unsurprisingly, financial stress among consumers is on the rise with 62% of consumers saying this has increased since last year, and 83% citing the rising cost of living as their main concern.
The number of people who felt confident in their relationship with money declined from 77% last year to now 61%.
This is being driven by a difficult economic backdrop as interest rates rise and inflation continues to bite. Worryingly, 41% of consumers have little to no confidence in the economy.
However, the findings also highlight further opportunities to enhance consumers’ financial wellbeing, amid this increased economic turbulence.
Almost three quarters (74%) of consumers say they need their bank to be able to connect to the apps and services they want to use, while 48% would like to see their bank partnering with more FinTech companies.
Enhanced connection of financial data including pensions, savings and investments – also known as Open Finance – is the next step to enable UK consumers to understand and manage their holistic financial life.
“From budgeting apps and savings platforms to automated bill payments, FinTech is having a clear and consistent impact. When people use it, they gain clear benefits of saved time and money, and increased control, which is exactly why adoption is persistent,” said Kat Cloud, UK Policy Lead at Plaid.
“Given all of the economic uncertainty and the stress that results from that, FinTech tools will provide critical lifelines.
However, to keep up this momentum, we urgently need to transition from Open Banking to Open Finance, enhancing people’s access to a wider range of their financial data.
Open finance will give the FinTech industry the ability to deliver new digital financial use cases that better meet people’s needs, from pension management to better debt management tools.”
Source: Payments Cards and Mobile