How open banking can help consumers manage cost-of-living challenges

15 March 2023

With record rises in the cost of living, and many of the UK’s households and businesses facing rapidly rising bills, it’s more important than ever for consumers to understand and manage their money in the most cost-effective way.

A recent report from open banking platform Yapily revealed that around 95 per cent of consumers are concerned about increases in the cost of living. In addition, Bank of England figures for January 2023 show that consumers borrowed an additional £1.6 billion in consumer credit (net), compared with £0.8 billion borrowed in December 2022. This was split between £1.1 billion of borrowing on credit cards and £0.5 billion of borrowing through other forms of consumer credit, such as car finance and personal loans.

Yapily’s research also reveals that 88 per cent of consumers have looked to financial products and services in the past year to help them manage their finances more effectively.

We highlight some of the most common financial challenges and explain how open banking-enabled tools and services can offer simple and practical ways for consumers to take greater control of their finances.

By consenting to share their banking data, consumers can:
• Use personal finance apps and account dashboards that give them a clear view of all their incomings and outgoings to help them better understand their finances.
• Identify ways to budget better and shop around for money-saving deals.
• Help build a regular savings habit – however small – with round-up apps that tuck away spare change, or which move surplus funds to interest-bearing accounts.
• Access affordable credit, particularly if they don’t meet traditional lending criteria.
• See if they are eligible to switch to an affordable energy or broadband tariff.
• Use budgeting tools to help navigate their way out of problem debt or to access professional debt services faster.

These tools can boost individuals’ confidence in their ability to manage money, and, in turn, build financial resilience and improve financial wellbeing.

Read our article on how open banking can help tackle cost of living challenges, and watch our short videos to see how it works in practice.