By Howard Pull, Head of Digital Transformation Strategy at MullenLowe Profero
Six months into COVID-19 and the entire British economy has been completely upended. Entire sectors have collapsed, businesses have furloughed staff, salaries have fallen or stagnated and public debt has topped £2 trillion for the first time ever. This has resulted in the UK entering into its largest recession on record with a 20.4% slump between April and June.
While there’s hope that the economy will start to bounce back following the easing of COVID-19 restrictions, the impact of those early stages of lockdown will still be felt for some time to come. Indeed, when the furlough scheme ends in October, there are fears that up to two million jobs could be lost.
With so much uncertainty in the news right now, money worries have become increasingly common. For young people, in particular, the potential risk of salary cuts and layoffs have exacerbated financial woes. According to a new report, from MullenLowe Profero in partnership with Censuswide, into the financial wellbeing of young people during the pandemic, 40% of 18-25-year-olds are sometimes afraid to even look at their bank account.
Education, Education, Education
During the pandemic, banks have stepped in to provide financial support. Acting quickly in lockdown, many introduced a raft of new measures including cash delivery services, additional training and telephone support to help customers switch to online banking. In partnership with the government, banks also helped businesses survive the ongoing crisis by launching COVID-19 support packages.
For young people, however, the measures don’t seem to have hit the mark, with the same report revealing that half of young people’s concerns around managing their finances has increased since the pandemic. The survey found that the majority of 18-25 year olds believe that banks can alleviate their financial concerns by better understanding their spending, helping them create better money management habits and making them feel safe from fraud.
In order to address these concerns, banks therefore should look to provide more educational support for their customers about how they can make the right financial decisions. This means designing tools and creating support services to enable customers to effectively manage their finances. Schemes such as online workshops can help to build young people’s money knowledge, skills, and mindsets, for example.
With the pandemic radically shaping habits, educational services need to adapt and move online. While consumers in the past may have preferred to discuss financial matters in person at a bank branch, risk of the virus and the widespread use of digital tools have meant that people are increasingly looking online for support.
The benefits of educating customers
Proving educational services, doesn’t just help young people during a pandemic, it also helps banks in the long term. Giving 18-25 year olds the tools to make better financial decisions with simple and straightforward guidance will increase their chances of surviving the pressures of recession. For banks this means they will become better customers and lead to an increase in the use of other products and services such as mortgages and investments that produce revenue for banks longer term.
While reports indicate that the economy is set to bounce back after a devastating Q2, uncertainty from the coronavirus and underlying impact from the lockdown are undoubtedly going to continue to cause financial anxiety for young people for some time to come. Providing much-needed support by digitising educational help, as well as creating products and services that actively help manage account holder’s finances, will create big advantages for bank brands and the customer loyalty this will inspire.