Lloyds Bank’s first UK Consumer Digital Index says people are losing hundreds of £ by not shopping online for the best deals.
Lloyds Bank last week unveiled results from its first ever UK Consumer Digital Index. The Index, in association with digital skills charity Go ON UK, Accenture, and Toynbee Hall, is the only report of its kind in the UK that looks at the trends in digital and financial capability and, for the first time, aims to understand them from a UK wide perspective.
The Lloyds Bank Consumer Digital Index combines insights on levels of digital and financial capability of a broad spectrum of people across the UK . Significantly, those people who make the most of being online, such as through increased access to research and comparison sites, offers and discounts, have a real advantage against their non-digital peers. This means that they are typically more financially resilient and also report greater overall wellbeing.
However, the Index also reveals that people can benefit no matter what their financial capability may be – with those on the lowest incomes of under £15,000 per year actually saving an average of £516.
Miguel-Ángel Rodríguez-Sola, Group Director of Digital at Lloyds Banking Group says: “Irrespective of geography, age and circumstance, a person’s financial situation has a huge impact on the way they are able to live. It impacts day-to-day welfare and wider wellbeing.
“Our first Lloyds Bank Consumer Digital Index clearly shows those who make the most of being online are able to gain the most financially. Notably, it highlights a growing ‘digital dividend’ or a missing financial bonus, with people who shop around online reporting an average annual saving of £744 and those on the lowest incomes missing out on a sizeable £516 per year which could be used to supplement day to day living expenses.”
Winners and losers of ‘Digital Dividend’
Generation X is reaping the biggest benefits online, but it’s the over 60s who have the most to gain digitally. This age group is financially savvy and adept at saving and using a variety of financial products and services, yet are failing to realize that they could make huge savings online through price comparison sites.
Looking at the spending habits of those with low and high financial capability, digital ‘know-how’ has a huge impact on what a person can save. When it comes to utility bills, the more digitally savvy a person may be, the less they will spend in comparison to their non-digital peers as they shop around for the best online deals.
Commenting on the report, Martha Lane Fox, Chair of digital skills charity, Go ON UK says: “It’s unacceptable that the people who can benefit the most from what our digital age has to offer are currently missing out making huge online financial savings.”
“Of the over 60s who are digitally excluded, 64% say they are worried about privacy and security and 62% claim the internet is of no interest to them. Yet, a staggering 86% of people who manage their money online say they “worry less”. We know that the older generation, whilst financially capable, are more likely to be concerned about the safety and security of the internet, yet this evidence shows there are huge emotional benefits if people have more choice and control around their real time money management.”
The research supporting the Lloyds Bank Consumer Digital Index also looked at what might help encourage older people to engage digitally. Worryingly, despite being offered a range of options from ‘free access’ to ‘skills and training’ almost half of the 60+ digitally excluded group (47%) said that nothing could encourage them to get online.
Gareth Wilson, a managing director and banking practice lead in Accenture’s financial services practice said: “As the first report of its kind, the Lloyds Bank UK Consumer Digital Index goes a long way to highlight the very tangible personal financial benefits that ‘going digital’ can have on people’s lives. While consumers today are increasingly digitally astute, this Consumer Digital Index highlights a real gap between those with high and low digital capability, and their varying opportunities to access digital tools to boost their financial and personal well-being. With over 11 million UK consumers having low digital capability, there is a real opportunity for fintech companies, organisations and government to help drive digital skills and bridge this gap.”
Lane Fox adds: “We know from our research that ensuring universal Basic Digital Skills would give Government a direct cash return of £1.9 billion in increased tax receipts, lower job seeker allowance payments and NHS primary care savings. As such, it is vital more is done now to shift the perception around the benefits of digital and to help boost the lack of confidence and motivational barriers that may be holding people back from benefiting in our digital age.”
Miguel-Ángel Rodríguez-Sola concludes: “As the Index shows, being online is a key enabler, not only can it help save money, but for many people, it is a lifeline – allowing them to stay connected and access the right information. Four out of five people say that managing their money online takes away some of their worry. We should not underestimate how important enabling even more people to be digitally capable is and the positive impact it would have on their finances and wellbeing.”
Key figures from the report include:
• Over two-thirds (70%) of people say the internet helps them to save around £62 per month or £744 per year
• People whose annual income is less than £15,000 can save £516; a significant proportion of their earnings. This could cover the cost of ten weekly food shops for the family, fill the car with petrol ten times over , or pay for nearly half a year’s dual fuel bill
• With financial stress ranked as the primary cause of mental health issues in the UK – four out of five (86%) people who manage their money online say they “worry less” if they have more choice and control around their real-time money management
• Digitally savvy consumers can save 5-10% on their utility bills (equivalent to six weeks of utilities free each year), which is particularly important given the continuing increase in fuel costs;
• There’s a £3.7bn savings opportunity for UK adults each year, if the 7.1 million UK people who do not have a bank account plus those who are also digitally excluded were to capitalise on the opportunity to benefit
• Generation X, (those born between the early 1960s to mid 1980s), are the clear financial winners of our digital age as they are savvy at shopping around online and confident in money management
• Based on the UK’s projected growth in digital the divide could deepen for those who are already financially and digitally excluded – meaning a risk to financial and personal wellbeing