The Customer Effect

Quick Take: Scrutinizing the impact of inflation on consumers’ finances

  • Troubles in finance paradise continue. With passing months these anxieties have been growing and are reflected in other parts of customers’ financial habits as well.
  • With rising inflation, how are increasing rents, embedded finance, & layoffs affecting consumers' financial anxieties?

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Quick Take: Scrutinizing the impact of inflation on consumers’ finances

In early February we reported that inflation is negatively impacting consumers’ ability to save and those who are saving are prioritizing paying off debt. Nearly 2 months later, have consumer anxieties abated?

Consumers' renting woes:

Troubles in finance paradise continue. With passing months these anxieties have been growing and are reflected in other parts of customers’ financial habits as well. With more than half the respondents reporting rent hikes and 61% saying they are delaying purchasing a house due to rising interest rates according to recent data by Marqeta.

Impact of inflation on rising rent. 51% report that rising rates are leading them to delay purchasing a home.
Source: Marqeta

Lay offs:

the recent wave of layoffs has been particularly bad for younger consumers, who were impacted by job instability at a rate four times that of their older counterparts. The effects of the turbulence in the job market is felt more deep among American consumers compared to the UK or Australia. These shifts are also impacting how people budget and spend, with 61% of 26 to 50 year old consumers in the United States reporting they have made changes to how they spend and where.

Bar chart showing that 29% of consumers aged between 26-34 years felt the impact of recent layoffs. Conversely only 8% of those aged between 51 to 65 years felt any affects.
Source: Marqeta

Consumers’ banking habits:

With shifting economic sands, the banking features that customers are most interested in are changing as well. Features like round-up savings, automated savings, and overdraft protection rank highly on customers’ priorities. Due to economic pressure and inflation, consumers are actively looking for the best offer and are willing to try non-traditional finance providers, with 47% reporting interest. 

This interest doesn’t exactly map onto the generational divide among consumers: 60% of younger consumers (26-34 years) report interest in embedded financial services while only 22% of older consumers show similar interest.

Grouped bar charts showing how many consumers agree with the statement "i dont really worry about the economy- it doesnt affect my daily lifestyle or spending". Consumers in Australia and the UK show the largest percentage of disagreement at 55% with US at 42%.
Source: Marqeta
Donut charts showing that 60% of consumers aged between 26-34 would consider embedded financial services. A total of 47% of consumers would consider financial services from non-financial institutions.
Source: Marqeta

Consumer sentiments on crypto:

Customers are still interested in crypto, with more than a quarter stating they wished it was easier to spend against their crypto balances. While there is interest it is not a huge pivot, since 59% of customers are still uncomfortable with holding a majority of their savings in cryptocurrencies. 

What this interest more accurately represents is the shift towards modern banking solutions, with 43% of consumers reporting that they utilize multiple FIs. Most choose to have their wages deposited in their traditional bank but use modern banking solutions to access features like early wage access, automated saving, and overdraft protection.

Grouped bar chart showing consumer sentiment towards crypto.  59% report not being comfortable with the holding a significant amount of their savings in crypto while 31% report they would like the ability make purchases or think it would be easier to spend against their crypto balance.
Source: Marqeta

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