According to Finder’s digital banking statistics, around 93% of Britons used online banking in 2022. The rise of digitalisation has certainly made it easier for us to manage our finances, but has it made it too easy?
Reviews and Regulatory Checks
One great impact of digitalisation is the ease of which we can now check the trustworthiness of financial advisers and firms which offer financial products or services.
It’s easy for us to check reviews and ratings online to see other people’s experiences with different businesses and individuals. Even more importantly, we can easily check whether advisers or firms are FCA or PRA regulated to ensure that we are properly protected when receiving financial products or services.
Online Banking
Online and mobile banking can enable us to manage our money easily at the click of a button. It allows us to see the exact numerical figure of what we have in our bank account and allows us to set up savings accounts with little hassle, encouraging saving and financial planning.
However, not all of the effects of digitalisation have been quite as positive…
Accessibility
Digitalisation has made it far easier for us to check our finances and make changes to them, such as making an online banking transfer in less than a minute.
In fact, according to Finder, 49% of those who opened or intended to open a digital bank account cited convenience as a driving factor, with 16% driven by a lack of branches in their area. But is ‘going digital’ a response to banks closing, or is it also a driving factor as it reduces the demand for their services?
The Rise of Cryptocurrency
Digitalisation has led to the boom of cryptocurrency in recent years. Depending on your viewpoint of cryptocurrency, this can either be seen as a more positive or more negative impact.
Whilst many now swear by cryptocurrency, it does offer us the opportunity to take on more risk when investing. This can of course reap high rewards but it can also lead to huge losses due to its volatile nature.
Online Loans
With digitalisation has come the emergence of online loans. It is relatively easy for us to apply for online loans with us now able to borrow money from the comfort of our own homes.
However, the ease of which we can now obtain loans might actually make managing money harder in the long run. This is because it encourages many people not to manage their finances at all, but to instead expect that they can rely on borrowing.
It’s arguably too easy to be accepted for payday loans online due to affordability checks which are often inadequate. This makes dealing with your finances harder in the long run as you will still have to deal with the original debt but with the addition of excessive interest rates.
Buy Now Pay Later
Buy Now Pay Later firms have made it too easy for us to overspend, as it encourages many people to think they can afford more than they actually can and spend without repercussions. However, there are of course significant repercussions of this.
Apple Pay, Contactless and Debit Cards
Apple Pay, contactless card payments and debit cards mean it’s now very easy for us to spend money. If paying solely with cash, you would have to ensure that you always had enough cash on your person, which is a double-edged sword.
It would mean you wouldn’t necessarily have enough money if you were in an emergency that required payment, e.g, running out of petrol. It would also mean you would always have to carry cash, sometimes in large quantities. Therefore, if you were to lose your purse or wallet, this money would be gone.
Having a debit card or a form of online payment means that we avoid both of these issues. With the latter, you could cancel or temporarily freeze your debit card if you were to lose it.
However, these forms of payments have perhaps made spending too easy. It is easy for us to spend money without really thinking about it leaving our account. For more information about how cash may be better for helping us budget, click here.