The cost-of-living crisis is putting 37 million Brits at risk of financial distress, a report from Tink suggests banks need to offer them some support.
In its new report, it found that 46% of people in the UK are ‘only just managing’ and expect their income not to cover their essential spending in the future. A further 23% are identified as ‘financially vulnerable’, with their current income not covering essential spending.
Based on these findings, around 37 million Brits are either experiencing or expecting to face financial distress.
Tink compiled the research to understand how those who are ‘only just managing’ are currently coping with the rising cost-of-living.
It found that of this group, 25% have sold possessions to make money and 27% have used their savings to cover living expenses. Another worrying stat is that 19% of people expect to skip meals or make use of a food bank in the future, and 12% expect to miss a rent or mortgage payment as their financial situation worsens.
Additionally, 31% believe they will need to use credit cards more frequently and 20% expect to make greater use of deferred payment options in the future.
Another finding from the report is that 72% of those in the group of ‘only just managing’ believe they have a clear view of their finances and 65% say they are on top of expenditure but struggle to keep up with constant price increases.
Despite this, only 48% say they use basic online banking tools, and 24% say they prefer to manage finances manually.
Tink believes this leaves an opportunity for banks to support customers and improve their confidence in transitioning to managing their finances digitally.
Tink added that there is an appetite among consumers for products, services and tools that will help them improve their finances. Of the ‘only just managing’ group, 55% said banks should provide financial support to customers during the cost-of-living crisis.
One in five (22%) would like their bank to actively show them which providers have better deals and where savings can be made. Similarly, 22% want their financial providers to suggest where they could be spending less each month.
Showing the importance of meeting customer expectations, 35% said they would switch banks to one that provided them with tailored financial support, and a further 44% would jump ship to a bank that provided recommendations on where they could save on spending.
Tink UK & IE banking lead Tasha Chouhan said, “There is a clear opportunity to offer more support to struggling Brits as we deal with the biggest drop in income witnessed for decades.
“With the success of open banking, banks are today in the best possible position to embrace data-driven technology to develop tailored support, tools and communications. This will enable people to better manage their finances during difficult economic times, while improving customer engagement and shoring up long-term loyalty.”
Last year, Tink partnered with money saving app Snoop to help UK customers save money on bills.
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