Financial experts explain how money can be saved by using banking apps to get better credit card and mortgage deals, plus debt and investment advice. Most people just use banking apps for their day-to-day financial needs – but new research suggests such digital tools could save users thousands of pounds if used smartly.
Digital helpers like budgeting alerts that warn before accounts slip into the red, features that highlight better mortgage or credit card deals, and in-app steps for tackling debt or providing timely investment information can add up to around £3,500 per household over 10 years, according to a study commissioned by Lloyds Banking Group. The figure comes from trimming unnecessary costs, improving returns, and helping people spot money risks before they become difficult to manage.
The research was led by John Gathergood, a professor of financial economics at the University of Nottingham, who says the findings suggest that being smarter with the use of banking apps over the next decade could unlock around £100 billion in economic value for the nation.
Encouraging Everyone to Use Digital Banking
“Most adults in the UK now use digital banking – even among the over-70s a majority are using it – and we would strongly encourage everyone to start making use of these features as they increasingly become available,” Gathergood advises. “They’ll find there’s loads of benefits, and it doesn’t need you to be a tech whiz – increasingly, the interface is becoming more natural and more easy to work with, which spreads the benefits more widely.”
Jas Singh, CEO consumer relationships at Lloyds Banking Group, adds: “If digital banking makes it easier to switch to a better mortgage deal, understand your credit position, manage debt more effectively or build savings, the benefits are not only meaningful for individuals and families but, repeated day after day, across millions of lives, they can really add up to something much bigger.”
The report identifies seven areas where banking apps could either currently help customers to save or make money, or will be able to do so within the next five to 10 years.
Seven Areas Where Digital Banking Can Make a Difference
1. Accessible Investing
Many people keep savings in cash ISAs for long periods, missing out on investing in diversified funds. “Tech is going to be able to identify those individuals, and deliver them options and nudges,” Gathergood says. “It’s about making investing accessible to the much wider population.” This feature is currently becoming available.
2. Smarter Debt Management
Often people have credit card bills that could be paid off with savings. “Providers are going to be able to see that, and present to the consumer the idea that if we joined up your finances better, you could save some money,” Gathergood explains. This could save UK households around £15 billion.
3. Mortgage Switching
Many people are slow to arrange a new mortgage deal when their current one ends. Tech can look at an individual’s mortgage position and suggest deals when the mortgage is coming to an end, something already happening.
4. Credit Access and Choice
Young people and migrants often lack credit history. New data, such as rent payments, could be used to build a credit score faster. “This is a really important point for financial inclusion,” Gathergood notes.
5. Insurance Optimisation
Using transaction data to identify risks, apps could suggest life insurance when someone has children or quantify home and contents insurance needs. This should be possible within five to 10 years.
6. Smarter Money Management
Apps can inform people if they go into an unauthorised overdraft or have savings that could pay off high-interest debt. Future apps may bring data from different providers together for better overall choices.
7. Financial Capability
“An improvement in financial capability in the population, together with better ways of banking apps interacting with customers, can underpin about another £8 billion of savings through people adopting better choices,” Gathergood says.
Gathergood stresses that savings won’t appear overnight but will build as digital tools become smarter and more widely used. The power remains with individuals who must authorise transactions.
