Fintech for Saving: how to help customers through a cost-of-living crisis

With less money coming in and outgoings rising, customers are deeply concerned about their personal finances and the economic outlook generally. We consider some of the ways banks, FS providers and others are supporting customers during the cost-of-living crisis.

Brits are now more pessimistic about the economic outlook than at any time since records began in 1974. That’s according to a monthly survey of sentiment, compiled by GfK, which fell a further five points in September 2022 to -49. It’s a similar story in Europe. 58% of European consumers say their country is in a bad economic state, according to McKinsey.

Consumers are facing a cost-of-living squeeze, driven by rapidly rising food and fuel prices. Higher interest rates are resulting in higher mortgage repayments. All of which affects confidence, affordability and customer behaviour.

Nearly one-third (31%) of people are already having to spend money they don’t have, borrowing or going overdrawn before payday. And almost one-quarter (23%) plan to dip into their savings to help pay for the increased cost of living, research from pensions provider Royal London found.

Many admit they have little-to-no financial cushion. Only 17% of people said they could fund an unexpected expense of up to £100 from their income or savings. At the same time, households cannot afford to save. No wonder three-fifths (64%) say they’re overwhelmed.


Making it easier to budget and save

So much innovation in financial services over the last 30 years has made it easier to spend. Think: direct debit, contactless payments and one-click checkout. But during this cost-of-living crisis, there’s motive and opportunity to make it easier to budget, save, invest and borrow.

Providers can use advances in technology and real-time data to help customers budget better and save more. For example, Plum gives customers a consolidated overview of their finances using Open Banking data. And helps them automatically set more money aside, invest and save on household bills.

Similarly, the premium money management budgeting app, Emma, makes money-saving recommendations based on Open Banking feeds. And helps customers track debt, manage subscriptions and find cheaper alternatives while they save.

Monavate client HyperJar has digitised the money pot, by enabling multiple sub-accounts on one payment card. Customers can link their card to any jar and spend from it, share jars and limit or block spending. They can also save now and buy later, for example by ear-marking petrol money in a ‘Shell jar’ while earning a return on it.


Making credit work better

Providers are also using fintech and new data sources to help make borrowing better, simpler and cheaper, both for customers and themselves. Frequently, this means digitalising processes and automating more of the underwriting, for example paperless applications and credit scoring in seconds, not days.

Providers are assessing affordability or creditworthiness more accurately using real-time and alternative data. This improves access to credit for customers, particularly from un- or under-served groups. And increases approval rates and reduces defaults for providers.

LenddoEFL is an alternative credit bureau, helping to expand financial inclusion. It verifies identity and assesses risk using non-traditional data, such as social media activity, mobile phone records and utility bill payment history, which can be highly predictive of creditworthiness.

Numerous providers are making credit work better for customers. They offer full financial overviews, with bank account and credit card activity all in one place. Other features include spend categorisation, automatic roundups to save while spending, credit score tracking and personalised offers.


Making finance more personalised, intuitive and digital

The growth in the use of plug-and-plug financial technology, APIs and mobile devices is helping providers make finance more personalised, intuitive and digital. For example, commerce card Zilch, which offers buy-now-pay-later to its customers, uses its own mix of credit reference agency, Open Banking and proprietary behavioural data to create a 360-degree view of a customer’s affordability. Customers can either pay in one instalment (debit) or over six weeks (credit).

Embedding finance into non-financial websites, mobile apps and business processes is set to be a $230 billion revenue opportunity by 2025. That’s a ten-fold increased on the $22.5 billion in 2020, according to Forbes.

B2B examples of embedded finance include Liberis, which enables its customers to white-label various embedded lending options, such as Worldpay’s revenue-based loans to merchants. And Wagestream which allows businesses to offer employees flexible access to their wages in advance of payday.


The Monavate difference

There’s never been a better time to harness technology and data to help customers build a better financial future. Whether that’s better budgeting, smarter saving or cutting-edge credit at the point of need, Monavate aims to simplify complexity and cut time-to-market.

We offer one-stop card issuing. That’s everything you need to manage your card programme in one place: from BIN sponsorship and IBANs, to fraud prevention, compliance and more.

We’ve replaced the traditionally fragmented, confusing supplier landscape with our fully-integrated, self-serve platform to get cards in hands quicker than ever.

If you’re interested in card issuance via one provider, on one contract, with one point of contact and point of access, contact us today to find out more.