Financial institutions are ramping up data-driven financial management support according to new research by Tink.
Tink’s report said that more than four in five bank executives believe they have a responsibility to assist clients in better managing their finances during the challenging economic period.
Additionally, 45 per cent of those polled felt it is their obligation to make their products and services inclusive and accessible.
Banks recognise the commercial value of assisting their consumers in financial management. Over half of those polled believe there is a business case for assisting people in better managing their finances during the cost of living problem.
For instance, 42 per cent feel it’s a way to minimise client turnover, another 42 per cent believe it increases retention and loyalty, meanwhile 36 per cent believe it reduces customer acquisition expenses.
The report revealed that consumers are becoming more aware of and interested in financial management tools, as they look to banks for personalised assistance. In a survey of over 2,000 UK consumers, nearly half say they trust their bank more than any other financial services company.
However, just over a quarter believe their bank is assisting customers in coping with the cost of living problem by offering personalised financial assistance. A third would like their bank to do more to assist them in managing their finances.
When asked about specific tools they are aware of and would like to use, budgeting tools to help navigate the rising cost of living topped the wish list.
More than 31 per cent of respondents value tools that aided with creating and managing budgets to control spending, 30 per cent of respondents are interested in savings management software (for example, opening up and managing savings accounts) and 28 per cent showed interest in pending categorisation tools for grouping expenses.
Despite the potential of data-driven financial services, some customers are unaware of the financial management capabilities available in their digital banking app. For example, 30 per cent were uninformed whether their bank provides budget management tools and 35 per cent are unaware if their bank provides transaction categorisation.
The research said the top reasons stopping a minority of banks from investing in new data-driven services include a lack of expertise and resources to build these products internally (31 per cent) and a lack of competitive differentiation for the business (37 per cent).
Many banks are taking an offensive approach, embracing the opportunity to expand and invest in these services. More than 62 per cent of those polled are currently working on or would like to be able to offer budget management tools to consumers, while 63 per cent are working on transaction categorisation.
Forward-thinking banks that provide these services have already started seeing the benefits. Half of those surveyed think data-driven financial services have provided commercial benefits to their companies, while another half say it has helped them improve customer experience in particular.
Nearly half of those surveyed believe that data-driven financial services have helped them to support their consumers more efficiently through the cost-of-living crisis.
Tink Director Tasha Chouhan said: “As UK consumers brace themselves for ongoing financial difficulty, it’s encouraging to see banks recognise the responsibility and opportunity in offering data-driven financial services to help consumers manage their finances during this challenging economic time.”
