How Open Banking Can Aid Struggling Consumers Amid Rising Missed Payments
Recent research conducted by Moneyhub has unveiled concerning statistics regarding missed payments among UK adults, shedding light on the necessity for more adaptable payment methods, particularly in the realm of utility bills, as highlighted in The Fintech Times. According to Moneyhub’s financial wellbeing survey, 24% of UK adults have encountered missed payments within the past six months, with utility bills comprising 41% of these instances.
The survey further elucidates the pervasive anxiety experienced by consumers regarding bill payments, with over 77% expressing apprehension towards impending bills, particularly those related to utilities. Notably, 51% of respondents singled out utility bills as the primary source of financial unease.
Against the backdrop of escalating utility costs compounded by the broader cost of living crisis, managing monthly budgets has become an arduous task for many households. Ofgem’s December 2023 figures underscore this challenge, revealing a record consumer energy bill debt amounting to £3 billion.
Among utility bills, energy bills reign supreme in inducing stress, with 41% of respondents identifying them as the most anxiety-inducing. This is followed by water bills (14%) and broadband payments (10%).
In response to these findings, Moneyhub advocates for solutions that empower utility companies to assist struggling customers, particularly those grappling with recurrent payment issues. According to the survey, 38% of UK consumers believe that flexibility in selecting the date of Direct Debit deductions would alleviate their financial burdens. Additionally, preemptive notifications before payment due dates (28%) and enhanced visibility into income and expenditure (27%) emerged as crucial remedies.
Furthermore, 17% of respondents expressed that weekly bill payments, as opposed to monthly installments, would facilitate better financial management—an option especially appealing to those receiving weekly wages.
Open banking and open finance payments emerge as promising avenues for implementing flexible solutions tailored to individual consumer needs. By leveraging these technologies, providers can preemptively identify customers experiencing financial distress and offer personalized assistance, thereby fostering financial resilience.
Mark Munson, Managing Director of Payments at Moneyhub, underscores the significance of addressing missed payments, particularly concerning utility bills. Munson emphasizes the pivotal role of technology in enhancing consumer support and advocating for tailored payment options. By prioritizing consumer choice and flexibility, utility businesses stand to bolster consumer loyalty, mitigate churn rates, and elevate overall customer satisfaction.
As missed payments continue to plague a significant portion of the UK population, the integration of open banking and open finance technologies presents a viable pathway toward alleviating financial burdens and fostering greater financial well-being among consumers.