British households could pocket an extra £3,500 over a decade by letting their banking app send alerts about bills or nudges about how to manage their money, according to a new study.
But a bank boss stressed that it was a “fine balance” between helping people and being overly involved in their spending decisions.
An estimated £100 billion could be made available to UK households over the next 10 years if digital banking tools were widely adopted, research by Lloyds Banking Group found.
This is the equivalent of around £3,500 per household.
The research looked into the benefits of a range of digital helpers like budgeting alerts that warn people before accounts slip into the red, or notifications in their banking app to spotlight a better mortgage or credit card deal.
It found that the biggest financial gains could be available for those who are sitting on excess cash that could be put into investment products and build wealth over time – particularly benefiting mid-life savers or households with a mortgage.
But it also showed that lower-income households stand to get the biggest uplift as a proportion of their income, through easier debt management, access to credit and better everyday money management like keeping track of bills.
The research involved economic modelling by Professor John Gathergood from the University of Nottingham to calculate the potential financial gains to UK households over a 10-year period.
It covered a range of ways that people with varying incomes and financial situations could benefit from digital prompts and tools.
The study comes at a time of heightened uncertainty over the impact of the Middle East energy shock on the UK economy, with banks including Lloyds forecasting a worsening picture for growth, inflation and unemployment.
Jas Singh, who heads up consumer relationships for Lloyds’ retail bank, said he had not yet witnessed a spike in customers reaching out about concerns over their jobs or finances, such as during Covid-19 or the height of the cost-of-living crisis.
“Some people will contact us to say, how do I manage my bills better… but I haven’t seen a really big surge of more people cancelling subscriptions,” Mr Singh said, although he did highlight “people saving a bit more”.
On the topic of digital tools, Mr Singh acknowledged the need to strike the balance to make sure that prompts are personalised and relevant and avoid being invasive or unnecessary.
“It’s a fine balance between where we see we should lean in further and where it’s extremely reactive,” he told the Press Association.
“In my experience it works best to make suggestions to people which are contextual to them and their life circumstances.
“I think if the banks were giving you notifications to say ‘I can see you’ve just spent on a coffee at Costa’, I’m not sure that’s the role society expects banks to play.
“‘How much have I spent on coffee last month?’ – I think that’s a more relevant place to be in.”
