As Britons adopt fintech what will become of those left behind?

Asia's Tech News Daily

As Britons adopt fintech what will become of those left behind?
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Britons are increasingly using online banking, money apps and contactless cards, a comprehensive survey shows.

Fintech use and adoption has risen in Britain with 86 per cent now using online technology in their daily financial lives, according to research by US payments platform Plaid.

It found that Britons on average use three fintech products or services, with the average person now managing two thirds of their finances online, it claims.

As Britons adopt fintech what will become of those left behind?
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It also found that Britons expect to increase the number of digital apps and services they use by 25 per cent over the next six months, suggesting adoption will continue to accelerate.

Over the past decade, technology available to help people manage money has evolved rapidly. 

There are now apps that automate savings and investing, which has gone hand-in-hand with the decline in the more traditional ways of managing money, the survey showed.

For example, 4,299 bank branches have either closed or been scheduled to close since 2015.

Amid this wave of closures, more Britons have turned to managing their finances online, with the pandemic speeding up the change. 

More than one in ten savers started managing their savings online for the first time since over the past 18 months, according to Investec, and 8 per cent of savers say they stopped altogether using branch-based accounts during the crisis. 

The pandemic also saw many advised not to use cash, which further encouraged people to turn to contactless and other alternatives to pay .

Plaid quizzed 4,000 people for the research and found the level of fintech adoption has catapulted over the past 18 months, with more than three quarters of Britons now feeling confident using technology to manage their finances.

As Britons adopt fintech what will become of those left behind?
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Keith Grose, head of international at Plaid said: ‘This has been a ground-breaking year for fintech as the pandemic led people to turn to digital solutions.

‘This accelerated the inevitable and now fintech has reached mass adoption faster than almost any service besides the internet itself.

‘Moving forward, open banking will be a core part of digital life— and it won’t be just about understanding your finances but putting them to better use via new, digital payment methods.’

Time for banking hubs 

But while the majority of tech savvy Britons are flourishing in the digital age, many are feeling left behind.

There are whole communities where the removal of one bank branch will result in the high street becoming bankless leaving those unaccustomed to managing their  money online with major issues.   

Andrew Hagger, personal finance expert and founder of MoneyComms said: ‘It’s becoming increasingly difficult for customers without access to the internet when it comes to managing their money and paying their bills.

‘Providers are increasingly focusing on new and more efficient IT to deliver improved services across financial services more cheaply, but those who are scared to use the internet or don’t understand are being frozen out.

‘A generation of the UK population now has far less choice of products and means of managing their day to day banking, so for those people, maintaining a network of bank branches is critical.’  

One of the country’s leading banking campaigners, Derek French, a former executive of NatWest, has called on the industry to announce the setting-up of a nationwide network of banking hubs as a matter of urgency.  

He says their roll-out should begin in ‘months rather than years’ and should establish at least 200 banking hubs in the most ‘at risk’ locations within the next five years.

But physical banking hubs will not solve the problem alone.

With local bank branches continuing to close at a significant pace, people simply cannot rely on in-branch banking alone to meet all of their future financial needs. 

Michelle Stevens, a banking specialist at finder.com said: ‘For those who are too apprehensive or unable to use mobile banking via an app, it might be a good move to begin with online banking via a laptop or desktop computer. 

‘If you are worried about security, be assured that banks have robust measures in place, and you will be required to register for online banking and set up secure login details, so only you can access your account.

‘If your local branch has closed but you still want to speak to a member of staff in person, as well as being able to call your account provider, many banks now operate live online chat channels, or even take video appointment bookings.’ 

But for many elderly people without online access, support from family members in managing their money online is often vital.  

‘For elderly customers, reliant on family members, I would encourage them to consider setting up an enduring power of attorney,’ said Hagger.

‘This means if they get to a stage where they are unable to cope with running a bank account, at least a member of their family can legally step in and help.’ 

What does the future hold? 

While the prevalence of online apps, QR codes and digital payments is proving hard for some, many have found it beneficial.

People report that using fintech has helped them by saving time and money as well as reducing stress in many cases, according to Plaid’s research.

Of all the online options available to people, payment services are the most popular form of fintech amongst Britons with four in five stating they use online apps when banking and paying.

Kat Cloud, UK policy lead at Plaid believes this signals an opportunity for digital payment providers to expand yet further as cash usage wanes and the demand and popularity of online options continues to increase.

She and Plaid are calling on the Government to introduce reforms to allow Britons to share more of their data with fintech companies so as to help fuel further financial innovation in the UK. 

Cloud said: ‘In the UK, regulators have made great strides creating an environment that allows open banking to flourish.

‘But, plenty more remains to be done to unlock the true potential of the fintech sector – particularly when it comes to realising the potential of open finance.

‘Specific reforms including removing the 90-day authentication requirements currently imposed on people who use open banking, and an element of compulsion for real-time data sharing by current data holders, currently pose a risk for the UK as a hotbed for innovation.

‘For these reasons, Plaid strongly supports calls on the Government to fast track a “smart data right” that enables consumers to control their data, opening up the potential of open finance.’

As Britons adopt fintech what will become of those left behind?
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What is open banking?

Open banking was introduced by UK regulators in January 2018 and is designed to improve competition by allowing greater financial data sharing.

Under open banking, banks must allow people to share financial data, such as online bank, credit card and savings statements with authorised providers offering other financial services, albeit only with permission.

This means, for example, that American Express could view a Lloyds bank account, meaning it’ll be able to see whether a person qualifies for an Amex card based on income and outgoings.

In order to be granted access, companies must be regulated by the Financial Conduct Authority – so data isn’t available to just anyone.

It was thought that open banking would encourage competition and innovation within the financial sector, resulting in more money management apps. 

Those who don’t want to share financial information don’t have to – and it hasn’t proven that popular with Britons 

There’s no need to opt out in order for any third party to have access to data, but rather an opt in when setting up another financial services app.

For example, those who use a digital savings platform such as Chip or Moneybox – these link to a bank account via open banking to calculate how much a person can afford to save based on spending habits – but permission is needed.

Know who you are granting access

1. Check if the app, website or registered company is safe to use on the open banking app store, or check the FCA register or European equivalent. If it’s not on the list, don’t use it.

2. Read the small print – always read the terms and conditions before you agree to give a regulated app or website access to your data.

3. Read customer reviews online and in the app store to see what others say about their experiences.

4. Keep tabs on your bank statements and the permissions you grant to a regulated app. If something looks wrong, contact your bank and the app immediately.

5. A genuine bank or organisation will never contact you asking for your Pin or full password. 

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