How the lockdown has changed our digital habits

Since the start of lockdown, we’ve all had to adapt to spending most of our time at home. Some of the changes will be temporary; the 27% decline in consumer spending and the 450,000-pint drop in beer sales are likely to be quickly reversed as shops and pubs reopen. Other changes however may be longer-lasting; 5m households have signed up to streaming services since the lockdown began. It’s unlikely they’ll cancel these straight away when social distancing ends. In this blog, we’ll focus on some of the biggest changes to how people manage their financial lives.

How we bank

Working from home and the closure of non-essential shops has meant high streets have been practically empty for weeks. Bank branches have had to reduce opening hours and encourage their customers to go online. Between mid-March and mid-April, around 200,000 people downloaded their bank’s app every day according to research from Nucoro. Online banking is certainly not a new trend, but the lockdown has accelerated its growth among older generations. To support this, many banks launched schemes to help people bank online for the first time. Lloyds even provided free tablet devices and digital training to vulnerable customers who were cut off because of the pandemic.

The challenger slowdown

One unexpected trend has been the slowdown in the growth of digital banking challengers. You might have thought banks such as Monzo and Starling would do well during the lockdown due to their advanced digital features. But these apps’ downloads dropped 23% in March according to Finbold. Separate figures from Priori Data also showed these banks have been signing up new customers at a much slower rate. A possible explanation for this trend could be that people prefer familiarity in a crisis and they’re less willing to take a risk on a new bank. These banks also offer good value to customers who are travelling, which is less of a drawcard with borders locked down.

Another explanation could be that people have been receiving extra support from traditional banks during the crisis through payment holidays and waiving of overdraft fees, making customers less willing to consider alternatives. It’s common for people to use multiple products and services with the same bank i.e. savings accounts, credit cards, mortgages, business accounts or investment products. This interconnectedness makes consumers less likely to switch current accounts than switch energy suppliers and to a lesser extent broadband providers.

At Youtility we’ve taken advantage of these trends to help consumers escape the loyalty trap with their household bills and our API platform can be easily integrated into existing banking apps. This enables banks to offer their customers a seamless and integrated marketplace for household bills within their app. The service is particularly helpful for customers who rarely engage with their utility suppliers with most people tracking their spending on bills when they check their banking app. Capitalising on this behaviour, Youtility has been built to help banks deliver a fuller, more interconnected service to their customers with the ultimate goal of saving their customers money on their home finances, something that is more relevant now than ever before.

Changing saving habits

While many homes continue to face falling incomes and job insecurity, even those in more fortunate situations have shifted towards a more defensive approach to household finances, with holidays and restaurants off the menu for all. A record £7.4bn of consumer credit was paid off in April, the largest net repayment since records began. Another interesting story was that the Goldman Sach’s digital banking product Marcus temporarily stopped new applications for its chart topping high interest rate savings account as people built up savings balances in excess of £21bn, pushing them towards regulatory limits. In a similar vein, those with excess cash also looked to the volatility of the stock market with more than double the usual customer numbers opening online trading accounts. With the ongoing economic uncertainty, even when these higher income households are able to access their usual consumer purchases, we expect to continue to see a bigger focus on debt repayment and savings to prepare for any unexpected shock later in the year.

Digital property purchases

Finally, the process of buying or renting a house has changed significantly. During early stages of the lockdown, many estate agents introduced virtual viewings as a way for buyers to see properties while social distancing is in place. Knight Frank announced it could show all its 3,500 properties virtually. These viewings involve sellers or agents giving potential buyers a tour around their home using apps like Facetime or Zoom. The digital viewings have proven so popular as a first look that they are likely to remain even as we’re allowed to view homes in person.

Following the restart of the property market in the middle of May, Zoopla announced a spike in property sales. It’s unlikely this pent-up demand will remain and the property market is likely to suffer towards the end of the year. Whichever way it goes, virtual viewings and a greater digital engagement within the sector is likely to remain for the long-term.

The lockdown has resulted in previously unforeseen changes to the lives of all UK households. These are some of the initial trends we have seen arise and some we have seen accelerate/decelerate over the period.

Our core mission at Youtility remains the same and we know the important role our product can play in helping to reduce financial stresses – please get in touch if you’d like to learn more about our solutions both as a consumer or a possible partner.