The UK savings gap is a hugely pressing issue. The amount and rate at which working people are saving money for retirement is at a significant disparity with the amount required for a desirable living standard in later life.
Deloitte projects that the savings gap in the UK will reach a staggering £350 billion by 2050. This highlights the urgency to address the issue and find effective solutions to ensure individuals are prepared for their financial future.
What can Financial Services do?
Various factors contribute to the UK savings gap; increasing living costs, consumer debt, and a lack of sufficient financial education. Encouragingly, efforts have been made by the government and financial institutions to address this issue by introducing legislative changes and initiatives aimed at promoting savings, such as auto-enrolment, increased ISA flexibility, and the Personal Savings Allowance, but there’s still more to be done.
Savings capacity depends upon people having available money. At Moneyhub, we call this available money Potential. It’s the money left after non-discretionary spend is subtracted from income.
By helping users increase their Potential we can enable them to put more money in savings, investments or their pensions.
Helping people get established
According to the FCA, over a third (34%) of UK adults have less than £1,000 in their savings. For 18-24 year olds, that figure jumps to 47%.
These shaky foundations mean that as people then move through their late twenties and into their thirties, they may struggle to build savings capacity for things like a first home. Many are renting and may have taken on debt to get through the day-to-day.
So how can Open Finance help people establish themselves financially with firm foundations to build upon? And how can it help financial services engage them?
Engagement tools to help people take control
Whilst no amount of tools can make up for chronic low income or help families who simply do not have enough money to make ends meet, most money advisors say that the key to staying in control is to monitor transactions, set and stick to budgets and avoid missing regular payments.
Our technology is designed to help people do just that. You can embed the following solutions within your own offering to help users manage their money better, and make it easy to do so:
Financial MOT
Budgets and Forecasts
Credit Score Improver
Emergency Cash Builder
First Home Saver
Benefits Finder
Personal Debt Manager
Complete Personal Financial Management App
Get in touch to discuss which solutions could work for you →
Real users, real stories, real difference
Don’t just take our word for it. Ed is a Moneyhub user and father of 3. He’s worked in hospitality, the NHS and a forklift driver, and was struggling with debts he’d built up as a younger man
He explained, “I’d built up a lot of debt on credit cards by overspending and basically not having an understanding of where my money was and simply not caring. I used to buy things I could not afford and at the end of each month I was scrabbling around for pennies”
“I really like Moneyhub’s spending budgets, in fact they were almost life changing for me. I’d miss transactions in my bank accounts and credit cards and then spend ages going back trying to work out where everything was going.”
“By creating spending categories for everything such as fuel, beer, coffees, haircuts…all sorts of things, I could work out trends using the spending and income analysis, which enabled me to compare month on month. Looking back over the year I could see what I spent on average so I used that to set budgets and then every time I got paid I was able to put aside money in my bank account knowing that everything I had left was spare money. Since then my finances have turned around completely”
From day-to-day, to planning for the future
Once Ed felt in control of his day-to-day spending, he naturally started engaging with his longer-term finances:
“I had connected my workplace pension to Moneyhub so when the pandemic started I could see my pension’s value. Every day I looked it was going down as share prices were going down. Before Moneyhub I’d never have known about my pension but because it’s so visual, seeing the graph is brilliant. In fact it surprised me just how quickly pensions can go up and it's made me want to pay in more, especially now I’ve got spare money at the end of the month”
Building financial resilience unlocks customers’ Potential
Open Finance makes it easy for people to engage with their finances where they might have felt overwhelmed before. With oversight of where money is coming in and going out, incremental changes can be made, which include putting more money aside for later life.
Open Finance also offers businesses the chance to create highly personalised customer journeys throughout their financial life, resulting in stickier customers with increased Potential, to go some way to bridging the UK savings gap.
Find out more about how our technology can help you unlock your customers’ Potential →