Young consumers are feeling anxious about their finances. Could digital banking be a stress reliever?
- An ethnographic study by Finastra looked into consumers' emotional mindset when it comes to their finances.
- Anxiety seems to be pretty high among younger consumers. In their case, digital banking solutions could help ease the stress.
A study by Finastra released early June looked at people’s emotional mindset when it comes to their finances. In addition, it looked at how their emotional relationship with their finances affects their views of digital banking.
Financial anxiety is still alive and well in the US. And, as it turns out, this is especially true among young consumers who are active online, aged 18 to 24.
For one, a significant portion of young consumers are currently living paycheck to paycheck. And that could be because they’re avoiding looking at their bank account to figure out how much of their salary they can get away with spending per month, while still having some money left over.
Almost half of young consumers in the US who are active online say they feel anxious about their finances. Over 50% say they’re concerned about factors outside of their control affecting their financial security.
Part of the reason, according to the study, is the passivity young consumers feel towards their banks. They see these establishments as nothing more than places to store their money. And in that sense, it doesn’t really play a relevant role to them in helping them manage their finances.
Covid has accelerated a lot of things, including financial stress.
What users may need are more easily accessible tools to understand what’s happening with their money, according to Mary Connor, director of product management and retail solutions at Finastra. That’s where digital banks come in, which could help them better navigate and understand insight about their spending behavior.
For now, the US is still a bit behind compared to Europe in terms of digital banking offerings, but the potential is still there.
“Our study found that what determines financial empowerment is not how much money you have, but that you have the clarity, tools and understanding to work toward your financial goals,” said Connor.
“That lack of control is compounded for young people in the US, where digital banking offerings tend to lag as compared to Europe and other regions. Challenger banks have specialized in delivering the insights, knowledge and interactive features consumers need to feel in control of their financial situation.”