1 week Ago By Lauren Hinton
September 23 2024 29% of the UK public have reported that their financial health has deteriorated over the past six months, feeling the financial strain as rising bills and costs take a toll on their financial health, according to new research from Moneyhub . While the UK’s inflation rate has settled back down to the Bank of England’s 2% target, consumers are still feeling the pinch from the all-time high inflation experienced over the last year or so. Of those whose financial health has worsened, nearly two thirds (63%) cited rising bills as the main driver, with 60% citing inflation as a significant factor.
According to Moneyhub’s research, 15% of people identify themselves as “stretched”, defined as having nothing left outside of money used for necessary expenditure, and 9% identified themselves as “struggling”, defined as those that can’t afford their necessary outgoings. Worryingly, those identifying as “stretched” or “struggling” were more likely to have seen their financial health worsen over the course of the last six months (57% and 75%), highlighting the disproportionate impact recent economic conditions have had on these individuals. Despite these economic challenges, only 18% of those individuals that have seen their financial health worsen have spoken to their financial services provider, highlighting a concerning trend when it comes to people seeking advice.
Of those that hadn’t approached their financial services providers, 43% said it was because they didn’t believe the provider would be able to offer any support, and a further 13% were concerned about being penalised. However, with those struggling to get by reporting to be reliant on credit there are concerns that without support from providers they could get stuck in a cycle of debt. 12% of those “stretched” and 19% of those “struggling” admitting to relying on credit in order to afford their basic needs, and 7% of both groups said they have recently taken out a high interest personal loan to help afford their basic needs.
It’s crucial that providers are doing all they can to support all their customers, and most importantly their most vulnerable customers, during these challenging times. However, with many banks and financial services firms unable to see their customers’ finances in full, many providers are left unaware of the struggles that their customers may be facing. Indeed, 25% of those identifying as “struggling” said they had previously been approved for a financial product that they don’t think their circumstances were suitable for in hindsight, with 62% going into debt as a direct result.
Open banking tools can provide organisations with the technology and data to help detect the early signs of financial vulnerability. By being able to spot these signs ahead of time, businesses are able to proactively reach out to their customers, intervene and offer helpful interventions that prevent an issue worsening. Suzanne Homewood, Managing Director of Decisioning at Moneyhub comments: “The financial strain many people are experiencing is deeply concerning.
While we cannot change the macro-economic environment, the financial services industry can take meaningful steps to support customers better. “Understanding the full scope of a customer’s financial world allows for timely interventions that can prevent issues from spiralling out of control. By leveraging data and technology, service providers are able to have a comprehensive view of their customers’ financial behaviours and world, enabling them to spot issues early and provide the necessary support to help the individual get back on track, positively impacting financial health even in challenging times.
” Suzanne Homewood Moneyhub Moneyhub News Fintech Event Videos Fintech Fintech.
