Research suggests households could pocket an extra £3,500 over a decade with one small change. (Image: Getty)
British households could have an extra £3,500 to play with over a decade by making one small change, a new study suggests. The research, by Lloyds Banking Group, found that surprisingly large sums could be saved by Britons letting their banking app send alerts about bills or nudges to help them manage their money.
However, a bank boss stressed that there is a “fine balance” between helping people and being overly involved in their spending decisions. The study involved economic modelling by Professor John Gathergood of the University of Nottingham to estimate 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.
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Lloyds Banking Group found that surprisingly large sums could be saved by Brits (Image: Getty)
It found that an estimated £100 billion could be made available to UK households over the next decade if digital banking tools were widely adopted. That works out to around £3,500 per household.
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It explored the benefits of a range of digital helpers, such as budgeting alerts that warn people before their accounts slip into the red, or notifications in their banking app that spotlight a better mortgage or credit card deal.
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, the research indicates.
But it also showed that lower-income households stand to get the biggest uplift as a proportion of their income by making debt management easier, providing access to credit, and enabling better everyday money management, such as keeping track of bills.
The study comes at a time of heightened uncertainty over the impact of the Middle East energy shock on the British 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, told the Press Association he had not yet seen 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”.
With regard to digital tools, Mr Singh acknowledged the need to find a happy medium 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 news agency.
“In my experience it works best to make suggestions to people which are contextual to them and their life circumstances,” he added. “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.”
