Open Finance – Savings

Open Finance – Savings

Lydia Coyle
by Lydia Coyle

Saving is a critical element of managing our personal finances, and it tends to be the method that most individuals rely on, with investments being more financially exclusive in many respects. In fact, savings is arguably the first step in solving two key issues, Financial Inclusion and Financial Wellbeing.

Somewhat worryingly, 1 in 10 Brits have no savings at all, while a third of Brits have less than £600 in savings. For people falling into these brackets, even a small change in their approach to savings could make a great deal of difference to their financial wellbeing and provide a buffer of comfort to deal with life’s unexpected challenges.

Whether it is for a holiday, a house, or a Hoover, our customer research shows that over 70% of us regularly save for some sort of goal. Despite this, only 52% of us find it easy to save money.

So why are people struggling to save effectively today?

How could Open Finance solve some of the key issues with Savings?

Budgeting and forecasting tools

Open Banking has given rise to a whole host of budgeting tools that help customers to meet their savings goals.

Cleo provides insights into your savings and spending habits via a chatbot user interface, helping to change patterns of behaviour.

Moneyhub provides a tool within their platform that targets retail offers based on spending, helping customers to then move real savings that they make on purchases into a savings pot.

Additionally 75% of customers are calling for a tool that shows how their savings will grow over time – which will go a long way to shift behaviour from the short to long term. Envizage’s analytics engine goes the extra mile to create a comprehensive overview of an individual’s financial future based on their current financial situation and life aspirations.

Automatic saving

As many people don’t realise what they can afford to save, there’s great power in tools that can do it for them.

Chip uses existing Open Banking rails to connect to an individual’s bank account and automatically save money based on what the individual can afford.

Services, such as MoneyBox, round up individual transactions and save the difference (e.g. buying a £2.40 coffee means 60p is siphoned off into savings).

Interestingly, however, customers appear less inclined towards an app that automatically saves their money, possibly due to a desire to retain some level of control on how much they have available to spend at any time.

Automated product switching

The next natural advancement is to move customers’ savings to the account or product that is best for them.

Lumio is creating a tool that aims to automatically switch customers to the savings, investment and lending products that are best for them according to their complete financial picture, values, lifestyle and goals.

Similarly, Akoni’s cash management platform can identify the best location for a customer’s money based on their current situation and preferences. Importantly, via an API integration their solution can sit behind a provider’s interface – allowing the bank or provider to maintain the customer relationship while Akoni makes sure the customer gets the best product for them.

“Open Finance has got a long way to go, and the true test will be when a bank starts selling another bank’s products because it’s the best thing for the customer” – Mark Hartley, Co-founder of Bankifi.

Open Finance considerations within savings solutions

Read our report “Uncovering the true potential of Open Finance” for more insights and solutions being developed across the industry today!

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