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​Talk Money Week: What FS providers can do amidst the cost-of-living crisis

With this year’s Talk Money Week theme being Credit, we discuss cost-of-living credit use and what consumers want from their FS providers in these uncertain times.

It’s Talk Money Week, a campaign which takes place every November to encourage people in the UK to talk about managing their hard earned cash; from pocket money right through to pensions, no stone is left unturned.

The week also provides a platform to have a conversation about money between families and friends, at work, at school or any other walk of life. The goal is to turn talking about money from an awkward topic into something which is no longer taboo.

This is particularly prevalent as the cost-of-living crisis escalates and the recent budget announcement remains in a state of flux. It’s therefore apt, given the current economic circumstances, that the theme of this year’s Talk Money Week is credit, which people are relying on more frequently to help pay mounting bills.

The UK economy has slowed as the cost-of-living crisis continues to affect household budgets and commercial activity. The cost of living is increasing at nearly its fastest rate in 40 years and this is largely driven by the rising cost of food and fossil fuels.

The current state of play

A recent survey by card issuing platform Marqeta of more than 1,000 UK consumers shows that 57% are relying on credit to make ends meet, while almost half (48%) are struggling to make minimum monthly payments.

The research also shows that concerns around inflation and cost-of-living are affecting spending decisions. Almost three-quarters (73%) of those surveyed said they plan on reducing their spending, while 54% have been forced to delay making a major purchase on credit due to their current concerns.

The need for more creative credit options

As the majority of UK households struggle with rising prices and soaring inflation, they’re increasingly seeking out more creative credit options from their providers. Indeed, it’s the likes of credit provision and savvy budgeting that will ultimately help them to weather the storm as the financial concerns of consumers prepare to worsen.

Now is the time for banks to offer flexible credit options, smart budgeting options and better insights into spending to throw struggling households a lifeline. Developing personalised, user-friendly lending options that help consumers to navigate rising prices is crucial for banks that want to stay at the top of their game.

The power of innovation

Many of those surveyed by Marqeta are seeking more personalised offerings and credit card rewards, such as extra points or cashback for areas where they spend the most money (68%), offers from merchants they have shopped with in the past (43%), lottery rewards (36%) or cryptocurrency (24%). 63% of Gen Z, those aged 18 to 25, want more insights into their spending to help manage budgets more effectively.

Consumers are also seeking more flexible options to traditional credit. 56% have increased their use of buy now, pay later (BNPL) solutions over the past 12 months, with this figure rising to almost two-thirds (63%) among Gen Z. Some consumers want more innovation in BNPL and would like it to extend to larger purchases such as cars (28%), home renovations (27%), dental work (26%) and travel bookings (22%).

As consumers' purse strings tighten heading further into the winter months, the onus should be on banks and credit card providers to ensure they’re doing everything they can to support their customers. It’s clear from the survey that consumers want tangible control over their finances and this means having full visibility into their spending during tough times.

Banks can respond to consumer demand by offering innovative credit options, such as personalised services linked to spending habits, helping consumers to budget or devising new ways to build credit scores. These are, without doubt, the measures that help consumers keep their heads above the parapet as costs rise and emerge stronger than ever once the crisis is over.

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