A third of people without bank accounts in the UK say it’s a preference

30 Mar 2017

  • New research by Toynbee Hall finds that 32% of people in the UK without a bank account say it’s a preference, while 29% feel they have incorrect identification.
  • The research, published in Lloyds Banking Group’s Consumer Digital Index 2017, also finds that 31% of people without a bank account are between the ages of 20-29 and 26% between the ages of 40-49.
  • 67% are either “very confident” or “fairly confident” using an online search engine for good deals on comparison websites.
  • This research provides the most up-to-date understanding of how people without a bank account cope financially and digitally.

New research by anti-poverty charity Toynbee Hall, published in the Lloyds Banking Group’s Consumer Digital Index 2017, finds that there are three main reasons for not having a bank account in the UK: a preference not to use banks (32%), incorrect identification for an account (29%), and a previous negative experience (15%).

The research also finds that 31% of people without a bank account are between the ages of 20-29 and 26% between the ages of 40-49.

Interestingly, people without a bank account are not using payday loans. Just 6% of people who do not have a bank account have said that they use payday loans every few months, and 1% said they use this form of credit every month.

This might be expected given the introduction of the continuous payment authority (a payment deduction mechanism primarily used by the payday lending sector) where a consumer will need to have a bank account in order to obtain such a loan.

This research comes amid a recent report by the House of Lords Financial Exclusion Committee urging the government, banks and the city regulator, the Financial Conduct Authority (FCA), to stop the poorest members of society being excluded from even basic financial services and forced to rely on expensive and substandard products.

Existing research estimates that there are 1.71m people in the UK who currently do not have a bank account in the UK.

Findings from the Toynbee Hall research also include:

  • 94% of people without a bank account have a personal income of below £17,500 per annum, and 91% live in households where the total income is £17,500 per annum.
  • 55% are in council housing, while 24% are in the private rental sector
  • 31% are between the ages of 20-29 and 26% between the ages of 40-49.
  • 70% are recorded as having nothing in savings, while 20.5% have between £1-100.
  • 73% primarily use another financial product, such as a Post Office Current Account or credit union, while 27% are cash-only.
  • 5% are recorded as saying they get to the end of every month without any money while 35.5% are recorded as doing so fairly regularly.
  • 42% currently use, or have previously used, debt advice services.
  • Nearly 67% are either “very confident” or “fairly confident” using an online search engine for good deals on comparison websites.
  • 53% are either “very confident” or “fairly confident” using email and social media websites, and leaving feedback on shopping websites.
  • 44% use a smartphone

Sian Williams, Director of the Financial Health Exchange, said:

“We are very grateful to offer additional information to Lloyds’ Consumer Digital Index this year with use of ground-breaking research and interviews both with people that have no bank account, or who have only recently opened one.

“As our research shows, financial and digital exclusion continue to have a significant impact on the lives of people all over the UK. Interestingly, what our data finds that three quarters of those who don’t have a bank account today have previously had one.

“Toynbee Hall, through its frontline services and the Financial Health Exchange, will continue to help identify ways to improve the financial health of this group of people.”

Carl Packman, Research and Good Practice Manager, Toynbee Hall, said:

“The relatively limited knowledge we have of people without a bank account is down to two things. Firstly it’s a relatively small number of people, 1.71m in 2016, and secondly it’s very difficult to reach this group of people and understand their lives in relation to people who do have a bank account.

“Our research provides a voice for those people whose financial story often goes untold, and helps us to understand their lives better”.

Nick Williams, ‎Managing Director, Consumer Digital, Lloyds Banking Group, said:

“This year’s Consumer Digital Index shows a positive improvement in financial and digital capability with 1.1m more people gaining Basic Digital Skills and 332,000 people having improved their financial capability. It’s in the right direction but the rate of change is too slow compared to the pace of technology evolution and focused intervention is now needed.

“Organisations across public and private sectors must focus on one-to-one interactions. That’s why we have committed, as part of our Helping Britain Prosper Plan, to provide face-to-face digital skills training (including online banking) for 2.5 million individuals, small businesses and charities by 2020.”

Download the full report here.