In April, the Office for National Statistics reported that 87% of UK adults have seen their cost of living increase. Fast-forward five months and Britain is facing the worst cost-of-living crisis for over 80 years, with many consumers struggling to make ends meet before the crisis even hits its peak.
Courts are already gearing up for a mass of prosecutions for consumers falling behind with their payments as over 94,000 pledging to not pay their energy bills come the winter (The Don’t Pay campaign is relying on one million signatories pledging to cancel direct debits to energy providers).
“With interest rates rising, wages stagnating and the cost of goods skyrocketing, the cost of living crisis is having a hugely damaging impact on the finances of millions of households across the UK,” said Neil Kadagathur, CEO and co-founder of responsible lender Creditspring.
“The crisis is highlighting just how perilous people’s budgets are, and also highlighting the UK’s reliance on credit with millions forced to borrow to survive the next couple of months as inflation worsens and we prepare for the next energy cap rise.
To help people through this challenging time, Kadagathur believes that financial institutions must prioritise the financial wellbeing of their customers, making sure they offer clear services with no hidden fees.
“We – the government and financial industry – must also work to address the chronic lack of consumer education about finances so that people feel confident and empowered to make decisions that will ease pressure in the short term and benefit their financial health in the long-term.”
Up and down the country, shoppers are trying to find ways of managing their finances and tightening their belts. The financial future might look dire, but could fintech apps offer some hope to households looking to navigate the coming months?
Fintechs – financial services companies using technology to make it easier for people to understand and use their services – can help consumers gain an awareness of their individual financial situation.
“It’s never healthy to be in the dark about your finances,” says Ammar Kutait, chief executive and founder of W1TTY, a neobank targeting Gen Z consumers.
“If you’re scared to check your bank or unaware of your current monetary situation, fintechs can help.
Fintech apps typically include features such as a weekly or monthly spending analysis, which allows customers to see the bigger picture, highlighting areas which can be improved and any saving opportunities.
They also often include upcoming bill previews, subscription trackers, pending bill notifications and a host of other features which make it easy to spot where money can be saved. By helping people regain control over their spending, fintech apps can help consumers take charge of their finances and plan for the future with confidence.
Revolut was founded in the UK in 2015 and has since become one of the most treasured UK startups in the fintech scene.
The full service neobank helps users analyse their spending habits based upon spending patterns and makes it easier to set financial goals. Revolut has over 2 million customers in the UK, who have completed more than 150 million transactions between them.
According to the company’s website, it has saved customers £560 million in fees thanks to its real exchange rates.
With Revolut, consumers are able to save money easily by making the most of features including recurring payments to saving accounts and transaction round-ups to discreetly tuck money away.
The app is not only useful for personal finance – it is also well on the way to become a self-proclaimed ‘super app’ with functionality to purchase cryptocurrencies also added to the platform.
Described as a consumer’s ‘best financial friend,’ Emma is a personal finance management platform that helps users stay informed about what is coming and going into their accounts. It also offers actions to help improve financial health such as highlighting unnecessary subscriptions and paying bills off at optimal times during the month.
Advanced insights and budget management also provide shoppers with detailed analysis on all transactions made through the app.
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Moneybox can be useful when it comes to investing and savings opportunities. One of the platform’s most popular features is its Lifetime ISA account, which helps users save for mortgage deposits, especially for younger consumers
Moneybox offers a range of investment and savings opportunities to users that makes saving easy. The app has been particularly popular for its Lifetime ISA account that helps users save for a mortgage deposit or retirement. This is especially important for younger consumers who are worrying about getting on the property ladder while inflation soars.
Other popular features include pension investments and rounding up small payments into savings.
From a merchant perspective, there are apps to help track and improve the financial wellbeing of employees, who are being hammered by the cost-of-living crisis. Maji is a money management platform for small and medium enterprises (SMEs).
“The coming months will be challenging for consumers as well as retailers who face inflationary pressures of their own. Whether it is ‘own brand’ or suppliers’, the cost of raw materials; packaging; transport; energy; and labour is likely to increase,” Manhattan Associates UK director Alex Macpherson told Charged on the difficulties facing retailers.
“This cost is usually passed onto the consumer and so retailers will need to find ways to increase efficiencies in the background in order to limit price rises, maintain consumer loyalty and encourage repeat spending by passing savings back to their customers to reduce the financial burden across stretched paychecks.”
Maji claims that with its platform, “employees will feel less stressed, more optimistic and more settled in their roles.”
Powerful data, action-focused, personal financial education tools and financial planning services are all useful for retailers to implement to keep employees satisfied as times become tougher.
Fintech company Phlo Systems helps small retailers and traders move goods overseas, navigating damaged supply lines through smart tech.
The firm delivers ‘innovative digital solutions for end-to-end physical goods supply chain operations. meanwhile being ‘committed to streamlining international trade, finance and customs management, making it easier, faster, cheaper, more secure and transparent.’
Phlo utilises Cloud, AI, IoT, machine learning and Distributed Computing technologies to help the international trading sector move on and expand its current low tech, inefficient state, to a new, improved era of digital exchange.