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Moneyhub Finds ‘Clear Opportunity’ for Banks and Pension Providers to Help Consumers Manage Finances

Significantly increased costs, paired with higher interest rates, are leaving over half of people in the UK to regularly worry about their financial situation, new research from Moneyhub has revealed.

The middle-aged emerged as the most likely generation to feel the pressure on their purse strings, with 63 per cent of 45 to 54-year-olds indicating they are worried about their finances, Moneyhub revealed. While a total of 31 per cent of those surveyed admitted to putting off life goals (such as having children), due to not being able to afford it, this figure shot up to 48 per cent for 18 to 34-year-olds.

Following a difficult year for personal finances, 44 per cent of respondents said they had to dip into their savings in the past 12 months. Meanwhile, 28 per cent are struggling to save, while 18 per cent have an erratic approach to savings, with some months being better than others. Overall, only 15 per cent of respondents can save a significant portion of their income each month.

Other new Moneyhub research also found that retirement is at risk for two in five, due to struggles related to interacting with pension or investment providers.

In total, 42 per cent of consumers stated that they do not find it easy to interact with their provider, with 25 per cent citing that the biggest reason for communication being difficult is their provider not having an app.

This difficulty in communicating with providers could be leading to poor customer outcomes. Thirty-six per cent of consumers aged 35 to 44 years said too little information is putting them off adding to their pension; while 13 per cent of consumers don’t even know who their provider is.

Does open banking hold the answer?

In both cases, Moneyhub research suggests that banks and financial institutions, as well as pension providers, could all be doing more to help. Around 34 per cent of respondents said that banks and financial institutions don’t make it easy to understand finances, and 31 per cent said that they would save more if they understood their finances better.

When asked what they think banks can do to make life easier, 16 per cent said that they’d like nudges for when they could be saving money or switching to better savings rates. Thirteen per cent would like access to free money management apps that allow them to see and understand all their finances, and 12 per cent said they wanted easier methods to contact customer services.

Kim Jenkins, managing director of Moneyhub API, said: “Our research makes it clear that there is an opportunity to help customers understand and manage their finances. By using the available technology, banks and financial institutions would be able to help their customers properly understand their financial situation and provide smart nudges that would help them make better financial decisions.

“Through open banking capability and easy-to-build solutions such as Moneyhub’s Smart Saver API Recipe, banks can provide a helping hand for their customers to budget and know precisely when they have excess to save. This will also enable them to deliver better customer outcomes.”

Bettering pension support 

Mark Horwood-James, managing director at Moneyhub Personal Finance Technology, explained how pension providers could implement better technology to support adults across the UK as they plan for retirement: “Consumers are saying loud and clear that pension and investment providers can be doing more to help them make better financial decisions. It is also striking how in-demand technology is from customers.

Mark Horwood-James, MD of personal finance technology at Moneyhub
Mark Horwood-James, MD of personal finance technology at Moneyhub

“Apps and specifically the use of open banking and open finance technology can contribute to better financial wellness and encourage positive outcomes.

“The ability for consumers to see a holistic picture of their finances enables them to make decisions that can improve their long-term financial health. Pension and investment providers could have a huge impact in this area, creating brighter futures for their customers and their businesses.

“The UK Government’s new smart data sharing laws (DPDI) and pensions dashboard announcement – alongside the continued emergence of open finance is accelerating the race to deliver customer-centric solutions. And the next few years will rapidly reveal who leads, and who gets left behind.”

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