19 April 2024

Banking is broken: National research shows consumers encouraged to spend, not save

Banking & Finance
| The European |

CEO of money planning service HyperJar, Mat Megens, discusses how Britain’s banks are failing consumers, and explains how people can build a sustainable spending and saving habit with jam-jar budgeting.

The outdated and heavily regulated banking system in Britain has been harshly criticised for some time, as financial commentators and consumers alike have expressed dissatisfaction with the reluctance of both high street banks and challenger alternatives to offer financial planning support and incentives to save.  

A recent YouGov survey found that 55% of people in Britain have no faith that the banks are working in the customers’ best interests, and with the potential for negative interest rates – meaning customers would have to pay to hold money in a savings account – it’s clear to see that consumer sentiment towards the UK’s current banking structure is failing.  

In light of this, money planning app HyperJar is looking to disrupt the current banking model. Being able to compartmentalise our finances gives consumers far more psychological incentive to save and in turn allows them to stay on top of their cash flow at one of the most financially challenging times we have collectively encountered.  

The Money Advice Service also recommends visualising your finances to reinforce the mentality that ‘when it’s gone, it’s gone’ suggesting that jam-jar budgeting is the most effective way of helping prevent debt problems. 

Banking 2.0 has arrived – but challenger banks are giving consumers the same problem 

The ‘banking revolution’ promised by challenger banks and fintechs such as Monzo, Revolut and Starling in recent years has seemingly failed to address Britain’s banking requirements. Whilst many of these ‘mobile-first’ banks may offer flexible banking and easy access to additional services like insurance, loans and investment opportunities, many of the new-age banking applications are heavily geared towards expenditure, rather than saving money. 

According to data from Reuters, the big six UK banks (HSBC, Barclays, Lloyds, NatWest, Santander and Nationwide building society) hold around 87% of the retail banking market, but despite this, millions of consumers across Britain have expressed that their banks are failing them when it comes to helping them budget, plan finances and save their money.  

With this in mind, HyperJar revealed extensive national research which showcases the sentiments of Britain’s consumers on the subject of Britain’s banks: 

  • 52% of people in Britain (25,093,000) believe that the current banking structure leaves them with no incentive to save 
  • 32% of people in Britain (14,152,000) say that their bank doesn’t help them to budget and plan for day-to-day finances  
  • 18% of people in Britain (8,594,000) say that they believe that their finances are the least organised part of their life  
  • 26% of people in Britain (12,522,000) say that even before Covid-19, they had no savings or emergency buffer  

Mat Megens, CEO of HyperJar, discusses the research findings, and explains why the current banking systems in the UK are failing consumers across the country: 

There’s been a hostile environment for saving and planning for years, and the gravitational pull of easy credit has never been stronger. A new way for people to budget and spend well is overdue. 

In the current landscape, when many people are facing considerable financial struggles as a result of the pandemic, it is arguably more important than ever to help consumers develop more sustainable spending habits and boost their ability to save their money.  

HyperJar is committed to offering convenient and sustainable jam-jar budgeting accounts that help consumers to organise, grow and spend money smarter. The effectiveness of splitting out budgets and naming savings goals is well known, and our early customers tell us that adding a fraction more friction to their spending – taking a bit of time to think about what they want to spend in future – works. Visualising and allocating their money like this gives them clarity, control and confidence.” 

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