The pandemic, inflation, and the ongoing cost of living crisis have significantly impacted how consumers spend and save money. At the same time, the use of digital banking services has increased in the past two years. While digital banking has made it easier than ever to spend money, it’s also made financial management much more accessible, helping millions of people to keep better track of their finances and to save money.
How have saving and spending habits changed?
The annual inflation rate in the UK reached 11.1% in October this year, the highest it’s been in 41 years. With most UK households spending more money this year on electricity, gas, and water, setting aside cash at the end of each month is a challenge, or even impossible for some consumers. For those under financial strain, finding simple and easy ways to save is crucial.
What is the UK Strategy for Financial Wellbeing?
According to a survey of social trends in Great Britain, nearly half (46%) of adults claim they will not be able to save any money in the upcoming 12 months. The UK Strategy for Financial Wellbeing is a ten-year framework developed by MaPS with the aim of helping people make the most of their money and pension plans. The strategy outlines a few key goals, including providing 2 million more children and young people with a proper financial education. Research by MaPS identified 11.1 million working age adults on low-to-modest incomes who do not save regularly. This prompted the creation of the Nation of Savers initiative, which sets out to encourage 2 million working-age people on low-to-modest incomes into the habit of saving regularly by 2030.
The rise of digital banks and e-savings
Digital banking has been rising in popularity in recent years. By the beginning of 2022, 27% of British adults (~14 million people) had opened an account with an online-only bank, a near three-fold increase from January 2019. On this current trajectory, the amount of Brits with digital bank accounts is expected to reach 23 million by 2027.
Digital banking has empowered consumers in a variety of ways. Digital banks make it possible for users to receive wages and send money to loved ones in a secure, cheap, and rapid manner. Anyone can easily open an individual bank account, giving them the freedom to do what they wish with their money. But perhaps most importantly, digital banking has played a substantial role in encouraging customers to save money with the implementation of features that make saving straightforward and compelling.
Digital banking services like Starling, Chase, and Monzo allow users to set up savings buckets for their financial goals, with the option to set deadlines for said goals. Some apps like Atom offer fixed rate savings accounts, making it possible for users to save money for a set amount of time with a fixed interest rate that doesn’t change. The app Moneybox has a round-up savings feature, so that everyday purchases can be rounded up to the nearest pound and set aside in a savings account. The Dudley Building Society has introduced a number of savings features to their customers, from a savings calculator to the Young Savers accounts that parents can open to teach their children about the value of savings. By creating features that make saving seamless, digital banking services are making it more attractive for customers to save.
The impact of a strong digital banking customer experience
With 81% of adults saying that the quality of the online experience determines which bank they use, a strong customer experience (CX) should be at the core of digital banking. The digital customer experience can have a great influence on how people manage their money and how much they save.
Digital banks can help consumers reach their financial goals through features such as:
Many digital banks use push notifications to alert their customers when money is spent or balances become low, giving consumers greater transparency over where their money is going. Consumers can then adjust their habits accordingly.
Spending trackers and budgeting tools
By providing regular spending reports, consumers can see their spending broken down into concrete categories. Some banks even allow users to set a limit for each category, preventing them from going over budget on certain expenses.
With automated savings, consumers can set up for a certain amount to be stashed away every month without having to even think about it.
Because of digital banking, financial management tools are more accessible than they ever have been. This is fueling greater financial inclusion around the world as consumers are empowered with this technology to have greater control over what they spend and how they save.
What customers expect from their digital banking service
In order for digital banking platforms to retain customers, their services need to be quick, frictionless, and agile. Providing a good customer experience is a must for digital banks. Some of the expectations that consumers have for their digital bank include:
Digital banks should make signing up and creating an account as easy as possible with accessibility on multiple devices. Digital banks like Monzo and Bunq have made it so customers can create an account in a matter of minutes from their smartphone and receive their bank card in the mail only a few days later.
Real-time customer support
With the absence of staff at a traditional bank, digital banks need to be able to provide instant assistance when it’s needed. Bank of America provides users with Erica, a chatbot who acts as a virtual financial assistant and provides them with relevant resources. Erica sends users notifications, pays bills, and suggests ways for users to save. She’s also able to connect users with a customer service representative in the event that she can’t assist you.
It’s important to understand your customer behaviour to the point that you’re able to predict their needs and provide personalised recommendations. Starling Bank is known for its customer-centric approach, constantly seeking feedback from customers on what they can improve upon.
With the financial services industry revolutionising at an unprecedented pace, companies who still rely on core banking systems risk losing their competitive edge. Businesses leading the shift recognise that their services have to be nimble – changing as the industry and their customers evolve. Financial service providers need to be able to act quickly, and digital banking systems provide the foundation for this agility to flourish.
Give your customers the services they deserve
For financial service providers to stay relevant, offering an excellent customer experience is an imperative. However, when tackling countless other issues, CX can fall by the wayside. The Interact Application Suite can help you transform your digital platform’s customer experience in no time. The suite includes pre-built, pre-integrated, easy to configure services that work alongside your system. Interact Acquire will provide you with an intuitive onboarding and account opening process, making it easier to acquire new customers while Interact Connect offers features such as omni-channel engagement, secure communication, and strong customer authentication. The Interact Suite has helped many financial service providers deliver seamless, high-quality customer experiences. Make an enquiry today and learn more about how the Interact Suite will bring your digital banking experience to the next level.