The overwhelming majority of UK consumers and businesses have turned to financial tools and applications to cope with the cost-of-living crisis, according to new research from Yapily, Europe’s leading open banking infrastructure platform.
Yapily’s Open Banking and Financial Wellbeing report comes as the current economic climate continues to pinch the pockets of consumers and businesses across the UK. Inflation rates are hovering at a 40-year high with the cost of living now outpacing the average income for many households. As a result, nearly all consumers (95%) are somewhat or very concerned about the cost of living crisis. Businesses, too, are feeling the impact, with nearly half (48%) reporting they’ve had to raise prices to cope.
Brits using financial products to weather economic turmoil
The research reveals that almost nine in 10 (88%) consumers have turned to financial products and services in the last year to help them better manage their finances. What’s more, many consumers are using these services for the first time: 63% of consumers surveyed using budgeting apps are doing so for the first time in the last 12 months. This is the same for bill management (68%) and credit score tracking (68%).
What’s more, 66% of consumers have used financial products and services in the last 12 months to help supplement their income, with 36% using credit cards for the first time during this period, followed by buy now pay later (27%) and overdrafts (18%).
Businesses are feeling the impact and looking for support, too. As a direct result of the cost of living crisis, the vast majority of businesses (94%) have changed their business processes. The most common coping strategies are to cut expenses (48%), raise prices (45%), or utilise new technologies (28%). Three in four (75%) have used financial products or services to manage cash flow over the last year, turning to business cards (33%), overdrafts (31%) and loans (27%) to help.
Yet awareness of open banking remains low
Many of these tools are powered by open banking. With the customer’s consent, providers like Yapily can securely access financial information held by banks, enabling businesses to build smarter, more personalised and convenient solutions for their customers.
However, despite four in five (80%) consumers saying they feel confident they understand the money management tools available to them, the majority (52%) of those surveyed have never heard of open banking.
Businesses are more aware of the benefits of open banking than consumers. One third (33%) have heard of it and are considering using open banking-enabled products and services, whilst nearly a fifth (19%) have heard of open banking but don’t understand how it could benefit them.
Open banking-enabled tools can alleviate inflationary pinch
For consumers, open banking means greater access to better financial products and services, from budgeting apps that help people to save, manage, and move their money more efficiently, to lenders that carry out accurate affordability assessments based on income and expenditure rather than legacy scoring methods. To those businesses that have heard of open banking, the benefits are clear: reduced admin times (31%); a cheaper payment method (29%); and improved cash flow management (28%) being the top three selected.
Stefano Vaccino, CEO and Founder of Yapily, said: “Our research proves that businesses and consumers are seeking new ways to ease the burden of the cost of living crisis. At the same time, open banking is helping people access better and fairer financial services when they need it most. But until it is more widely understood and implemented, open banking’s power to cushion the blow of this inflationary pinch will remain out of reach for the masses. If open finance is the inevitable direction of travel, then the cost of living crisis is the unexpected catalyst that will — and must — get us there sooner.”
Commenting on the report, John Penrose MP said: “Yapily’s research shows how Open Banking is already helping consumers and businesses alike, and underlines the huge opportunities of broadening it to cover other industries too. An Open Economy Implementation Entity would free up every sector of our economy. The effect would be revolutionary, and I hope the Government will use the Data Bill to make it happen.”
Case studies
Juni – boosting SME cash flow
Juni enables eCommerce businesses to get a real-time overview of their finances, maximise cash flow, and receive better credit decisions – all critical to SMEs as the cost of living crisis bites harder.
With the customer’s consent, Yapily enables Juni to instantly fetch and aggregate financial information across multiple bank accounts. Juni then uses this information to make better credit decisions and help SMEs manage their working capital. It also allows Juni customers to make instant top-ups via open banking payments, helping to manage cash flow with ease and create a streamlined user experience every time.
“SMEs simply don’t have the time to waste on low-value and burdensome administrative tasks. By providing real-time data insights with open banking and Yapily, we are enabling SMEs to make faster, more impactful decisions that will be especially valuable during these difficult times.” – Samir El-Sabini, Co-founder and CEO of Juni
Crezco – making payments quicker, cheaper, and easier for businesses
Amid the cost of living crisis, increasing card fees and the threat of late payments mean SMEs are seeking ways to streamline costs now more than ever.
With Yapily and open banking, Crezco can offer businesses instant and frictionless account-to-account payments that eliminate legacy costs and manual processes, saving SMEs both valuable time and money. Crezco customers can then collect recurring payments, automate reconciliation, and integrate with accounting software to enhance cash flow management.
“Open banking is the technological revolution which allows us to build more convenient and cost-effective products to improve the financial wellbeing of our SME customers. Yapily provides Crezco with wide and robust connectivity to banks across the UK and EU, helping us to provide a cost-efficient and instant account-to-account payment solution to SMEs at scale.” – Ralph Rogge, Co-Founder and CEO, Crezco.