Banking on Banks 2023: Why banks and lenders must look beyond the cost of living crisis

ABSTRACT OF BANKING ON BANKS 2023:

This year, we once again spoke to thousands of consumers across six major European markets – Austria, France, Germany, Italy, Spain and the UK.

While last year’s research looked at where Europeans expected to cut back on their spending and where they would turn to for support, this year we wanted to look at what action was in fact taken, how consumers have changed their spending habits and what steps they have taken to manage their finances. We also wanted to specifically find out how banks and other financial providers have responded to the complex challenges.

This year’s report shows that, despite some encouraging signs of improvement, four in five Europeans still have concerns about their finances over the next 12 months. This is perhaps unsurprising when you consider, for example, the Bank of England’s top economist has openly stated that people in the UK need to accept they will be poorer. However, our research shows this sentiment is being felt by millions of people across the continent.

Our report reveals that the cost of living has indeed altered the ways in which people engage with and manage their money, particularly in terms of accessing online banking and other digital services. Many more Europeans are now planning to use digital tools to monitor their finances more closely going forward.

What has changed in the relationship between banks and consumers? For a start, banks have played a bigger role in helping Europeans to get by than many anticipated. In fact, when compared to last year’s findings, people have been twice as likely to turn to their bank for support than previously expected.

That said, there is more to be done. One in five still feel that banks need to do more to help people during the cost of living crisis, with some saying they should be more compassionate with those who are struggling to keep up with repayments.

This year’s report has identified a number of key areas in which banks and other financial providers must continue to improve, including enhancing their digital solutions. As well as their approach to credit repayments, these include the provision of comprehensive digital services and data sharing. In addition, and in light of the climate crisis, ESG considerations are now more front of mind for European consumers. Two-thirds are more likely to bank with a company that is transparent about its operations.

When it comes to data sharing, more Europeans have said they would now be prepared to share their financial data if it helped them to avoid financial difficulty or achieve their financial goals. The appetite is there and developments in open banking technology mean that banks and other providers can draw on this data to build a more mutually beneficial relationship.

Through a more holistic understanding of their customers, and an embrace of digital solutions, lenders can lend with much more confidence, ensuring they can responsibly extend their services to those who need them to stay afloat in today’s volatile economy.