Covid Drives UK Banking Revolution As The Nation Goes Online
- Covid-19 , Banking
- 11.01.2021 02:11 pm
More than seven in ten Britons say that life through two national lockdowns has fundamentally changed the way they manage money but, for once, the changes have been positive. Nationally, 62% of people say they are in better control of their money than they were before COVID struck, according to new research from ThoughtWorks, a leading global software consultancy.
At the end of a year of prolonged social restrictions and two national lockdowns, technology changed almost every aspect of life in 2020 – from home schooling and food shopping to remote working and online chats with relatives. The way people managed money changed too, with almost one in three people (31%) saying that, after a year of lockdown, they don’t use cash anymore.
As part of a new study, exploring the impact of the pandemic on people’s money and banking habits, ThoughtWorks asked a nationally representative sample of 2,007 adults how their money management had changed, what they had done differently - and what they had stopped doing altogether.
All the positive changes people have made in the way they manage money during 2020 were related to technology:
22% said they were now used to making more payments through Apps and tech platforms rather than banks
18% of people had used the long days at home, using online tools to give their finances a spring clean by building up their savings and cutting back on non-essential spending
A further 15% said they have shopped around for better deals on financial products (fees, charges, interest rates etc) with brands that are not traditional banks
15% said they had streamlined all their payments and banking online, saving time and money
Whilst younger people (under the age of 25) led the move into full online banking (29%) and shopping around for better deals with new entrant brands (20%), the positive impact of technology in improving money management was felt across all age groups. For example, the 35-54 age group were most likely to have gone cashless in 2020 (25%) – and 15% of over 55s said they had streamlined all their payments and banking online.
Beyond technology powering home life in 2020, the economic hardship experienced by many as a result of COVID had also forced changes with money management. For example, people that had been furloughed during the year were more likely to have reviewed their savings and spending (20%) and to have used technology to streamline their money management with 30% making more of their payments through Apps and tech platforms rather than banks, and 24% streamlining all their payments online to save time and money. The research suggests a correlation between using online tools and having a greater sense of control.
Personal banking: the year of seismic change
2020 was a year when there was a major shift in consumer habits with money. Nationally, 39% said they stopped going to a high street branch, 31% stopped carrying cash in their purse or wallet, 28% stopped using cash machines – and for nearly one in four (24%) it was the year when they stopped writing cheques altogether.
In place of this, many people said that lockdown was the first time they experienced modern, online forms of banking. Overall, 33% said they had tried mobile banking for the first time in 2020 and 36% had opened up a PayPal account for the first time.
Other firsts during included:
41% used online banking to check balances
16% cashed a cheque through mobile banking
14% had turned to online chat / AI to get advice
14% opened an account with an internet brand, such as Monzo or Plum
13% had used Apple Pay to buy goods
Phil Hingley, Director of Financial Services at ThoughtWorks UK, commented: “For long periods of 2020, households have adapted to confinement and technology has been a vital tool that has helped people to keep life going and stay connected with work and loved ones. In this context, with high streets empty and banks closed, many people discovered new ways to manage money and make payments online.”
“With hindsight, 2020 could well be the year when cash died. Changes in consumer habits also raise urgent questions for high street banks, as technology and more agile customer interaction have moved consumers away from a reliance on the high street. The question for banks in 2021 is how they will adapt. We believe banks still have a crucial role to play but the days of them just safeguarding cash and issuing cheque books are well and truly over.”
The research was conducted for ThoughtWorks by international polling company MaruBlue among a nationally representative sample of 2,007 adults in November 2020. The research was conducted online.