A survey of over 2,000 Britons shows that they are using more online banking, money apps, and contactless cards.
According to Plaid, a US payments platform, Fintech adoption and use has increased in Britain. Currently, 86% of Britons are using online technology in their financial lives.
It was found that Britons use on average three fintech services and that the average person now manages two thirds of their finances online.
Digital money: Up to 86% of people use the internet for their financial transactions
It was also revealed that Britons expect to increase their use of digital apps and services by 25% over the next six-months. This suggests that adoption will continue to accelerate.
The technology available to help people manage their money has improved rapidly over the past decade.
Apps that automate saving and investing are now available. This has been a boon for the According to the survey, traditional ways of managing money are less effective.
For example, since 2015, 4,299 branches of banks have closed or are scheduled to close.
This wave of closures has seen more Britons turn to online management of their finances, with the pandemic increasing the pace of change.
More than one in ten savers started managing their savings online for the first time since over the past 18 months, according to Investec, and 8 per cent of savers say they stopped altogether using branch-based accounts during the crisis.
Many were advised to avoid cash during the pandemic, which encouraged people to look for contactless and other payment options.
Plaid surveyed 4,000 people to conduct the research. The results showed that fintech adoption has skyrocketed in the past 18 months with more than three quarters (75%) of Britons now feeling confident in using technology to manage their finances.
The UK’s number of banks branches has been steadily declining over the past decade. However, for those who cannot or won’t bank digitally, a high street presence can still be important
Keith Grose is Plaid’s international head. He said that this year was a breakthrough year for fintech, as the pandemic caused people to look for digital solutions.
“This has accelerated the inevitable, and fintech is now reaching mass adoption faster than almost every other service except the internet.
‘Moving forward, open banking will be a core part of digital life— and it won’t be just about understanding your finances but putting them to better use via new, digital payment methods.’
Banking hubs are in need of time
While the majority of tech-savvy Britons seem to be thriving in the digital age and many feel left behind,
There are whole communities where the removal of one bank branch will result in the high street becoming bankless leaving those unaccustomed to managing their money online with major issues.
Andrew Hagger, personal financial expert and founder MoneyComms, said that it is becoming increasingly difficult for customers to access the internet to manage their money and pay their bills.
“Providers are increasingly focusing their efforts on new and more efficient IT to deliver better services across financial services at a lower cost, but those who are afraid to use the internet or don’t understand are being shut out.
“A younger generation in the UK has less choice in terms of products and methods of managing their banking day-to-day, so it is crucial to maintain a network of branches.
One of the country’s leading banking campaigners, Derek French, a former executive of NatWest, has called on the industry to announce the setting-up of a nationwide network of banking hubs as a matter of urgency.
He said that the roll-out should take place in’months not years’ and that there should be at least 200 banks hubs in the most risky locations within five years.
However, the problem cannot be solved by physical banking hubs.
People can’t rely on their local banks to provide all their financial needs.
Michelle Stevens, a banking specialist from finder.com, said that it is a good idea to start with online banking via a desktop or laptop computer if you are too nervous or unable to use mobile banking via app.
‘If you are concerned about security, banks have strong measures in place. To access your account online, you will need to register and set up secure login information.
“If your local branch is closed, but you still wish to speak with a member of staff in person and can call your account provider, many banks now offer live online chat channels or even video appointment bookings.
For many older people, however, it is vital to have support from their family members when managing their money online.
Hagger said, “For elderly clients, who are dependent upon family members, would I encourage them to consider setting-up an enduring power or attorney?”
“This means that if they reach a stage in which they are unable manage a bank accounts, at least one member of their family can legally step in to help.
What does the future hold for us?
Although some find it difficult to use online apps, QR codes, and digital payments, others have found it helpful.
According to Plaid’s research, people report that fintech has helped them save time and money, as well as reduce stress.
Of all the online options, payment services are the most common form of fintech for Britons. Four out five Britons say they use online apps to pay and bank.
Plaid’s UK policy lead Kat Cloud believes that this is a great opportunity for digital payment providers as cash usage decreases and online options continue to grow in popularity.
Plaid and She are urging the Government to reform to allow Britons more data sharing with fintech companies in order to fuel further financial innovation in the UK.
Cloud stated that regulators in the UK have made great strides to create an environment that allows open banking.
“But, much more must be done in order to unlock the true potential the fintech industry – especially when it is about realising the potential for open finance.
“Specific reforms, including the removal of the 90-day authentication requirements for people who use open bank, and an element compelled for real-time data share by current data holders, are currently a risk to the UK’s position as a hub for innovation.
Plaid strongly supports calls for the Government to accelerate a smart data right that allows consumers to control their data and opens up the possibility of open finance.
Open banking allows third parties access to your financial situation and allow them to make an assessment.
What is open banking?
Open banking was introduced in January 2018 by UK regulators. It is intended to improve competition and allow greater financial data sharing.
Open banking requires banks to allow users to share financial information, such as online bank, credit cards, and savings statements, with authorised providers who offer other financial services. However, only with their permission.
This means that American Express can view a Lloyds bank accounts, so it can see if someone qualifies for an Amex Card based on income or outgoings.
Access to data must be granted to companies that have been approved by the Financial Conduct Authority.
Open banking would encourage innovation and competition in the financial sector, which would lead to more money management applications.
Those who don’t want to share financial data don’t have to. This has not been popular with Britons.
You don’t need to opt out to allow third parties to access your data. However, you can opt in to set up another financial service app.
For example, those who use a digital savings platform such as Chip or Moneybox – these link to a bank account via open banking to calculate how much a person can afford to save based on spending habits – but permission is needed.