In association with
NESTA CHALLENGES
The use of new open banking apps will benefit your pocket in the ‘new normal’, says Catherine Thompson, Programme Manager, Nesta Challenges
AS Glasgow readjusts to new lockdown restrictions following a recent spike of Covid-19 cases, many are fearful not only of the health implications but the impact it will have on their finances too; more than a quarter of residents claim they are “terrified” of the financial impact of another lockdown.
As we contemplate what a “new normal” could look like, many will first be looking to rebuild their finances as months of lockdown restrictions and reduced income has left more than one in 10 in severe financial difficulty.
New research from the Nesta Open Up 2020 Challenge shows almost one in five Glaswegians say they won’t be able to recover financially this year and 22% are fearful for their financial future.
That said, more than a third of Glaswegians state they were able to save more money than usual during lockdown - squirreling away an average of £775 during lockdown.
The uncertainty and impact of the pandemic, combined with fears of further lockdown restrictions, is driving people to focus more on personal finances, and change the way that they manage their money. Half of Glaswegians used banking and money management apps during lockdown - 12% for the first time.
As the use of money management apps has risen during the lockdown period, so too has people’s trust and familiarity with them - helping to increase both financial and digital literacy across the nation. 74% of Glaswegians say they felt comfortable using apps and digital banking services during lockdown and plan to keep it up after restrictions ease.
This is good news for those looking for extra help and services to get on top of their finances and boost their resilience.
The introduction of open banking - which enables people to securely access their financial data through select third party services, such as these money management and banking services apps - gives people meaningful insights about their finances, whilst also helping them achieve specific goals, such as budgeting, reducing debt and putting aside savings for any unforeseen changes that the future may bring.
The research was conducted by Open Up Challenge 2020, which is run by Nesta Challenges in partnership with the Open Banking Implementation Entity.
The challenge was launched to help the millions of people who struggle to stay on top of their finances become more financially savvy through the use of open banking-enabled apps and tools.
Following the launch of the challenge, 15 fintech companies have been developing their open banking solutions to aim to overcome common financial problems or goals.
By using the apps and services, you can connect with your bank accounts to understand your spending, borrowing and access financial services tailored to your circumstances.
For example, for those who are struggling to get out of debt, digital debt adviser Tully provides online budgeting, debt advice, flexible repayments and money coaching to reduce the stress and hassle caused by managing our finances.
To help with money worries caused by the virus, Tully also has Covid-19 Relief and Wellbeing Network to help people apply for payment holidays from companies, such as utility providers or credit cards. Alternatively, Updraft is a service and loan designed to help people get back on track and reduce the costs of their overdraft and credit card borrowing.
With 16% of Glaswegians saying they have had to resort to paying for things on credit to get by during lockdown, this service could help many improve their situation. When you’re facing emergency costs, Wagestream provides those in work early access to earned wages as well as cash flow and budgeting advice as an alternative to costly pay-day loans.
It also offers immediate overtime payments for some healthcare workers.
And for renters, Canopy is a service that tracks rental payments to boost your credit score - but also offers an alternative to costly rental deposits with a deposit insurance product, which could be beneficial for the 12% of Glaswegians that say they have used up all their emergency savings to get by during the last few months.
It’s no secret that those with irregular incomes - such as freelancers, gig and zero hours contract workers - have been particularly hard hit by COVID, but Portify, an app designed for hard workers, “learns” income patterns and spending habits to help users avoid overdraft fees and escalating debt repayments; they offer an interest-free credit line and a credit building service to their members.
While Covid-19 has taught us that we can never be too certain about what the future holds, it’s important to know that help is available - and at our very fingertips - to help us achieve our financial goals and bring us closer to where we want to be, both for now and the longer term.
For more information about digital tools and money management apps that you can use to help with your finances please visit openup2020.org
Tully: www.tully.co.uk
Updraft: www.updraft.com
Wagestream: wagestream.com
Canopy: www.canopy.rent
Portify: www.portify.co
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