UK fintech startup Yapily has released a new report titled, “Connecting the Dots: Open Banking and Financial Wellbeing,” which surveyed 2,000 consumers and 500 UK businesses. The report comes as the UK is facing historic levels of inflation and economic stress. They found that 95% of consumers expressed concern about the cost-of-living crisis. The UK Consumer Prices Index (CPI) rose to 10.1% in September, a return to its peak in July and areas most affected include energy (electricity & gas), motor fuel, and food.
When times get tough during economic stress, consumers tend to turn to credit products. The report showed that 66% of consumers used a financial product or service to supplement their income, which was accomplished in a variety of ways: 33% used credit cards for the first time, 27% used Buy Now, Pay Later (BNPL), 18% overdrafts, 13% personal loans, and 6% turned to payday lenders.
Businesses have also looked for ways to supplement their income during these difficult economic times. Roughly three-quarters of businesses reported using a financial product or service for cash flow management over the last 12 months and 33% reported using business cards for this purpose. Business cards provide a fast way to get working capital, but the credit line comes at a higher interest rate than a traditional small business loan.
Overview by Ben Danner, Research Analyst at Mercator Advisory Group.