In the last 12 months, the pandemic has altered digital and financial lives, causing significant financial distress and uncertainty around employment and yet for others, financial reserves have improved. Either way, over the past year consumers, have been re-evaluating their relationships with money and technology according to Lloyds Bank Consumer Digital Index research.
Given the effects of the pandemic on day to day living, it is no surprise that there has been a strong uplift in the role of digital in people’s day to day lives, with 53% of people feeling they might not have coped during lockdown without going online and 60% felt they had more positive times throughout the pandemic because of their use of digital tools.
With the number of people offline decreasing, only 5% are still not online -Wales, East of England, South West and North East are the nations and regions with the highest proportions of people still offline. Of those not digitally connected, 39% are under the age of 60 and 55% earn under £20,000, implying a greater disparity from a digital perspective. Almost 20% (compared to 10% in 2020) of those still offline, site not knowing where to go for help as a blocker to making the transition online and nearly half of those offline say they are offline due to a lack of interest, up 11% more than last year.
More than half (55%) of the online population increased their internet usage throughout the pandemic, with users spending 13 hours online more per week on average than before. Users have become more engaged, with almost 90% making purchases online, an increase of eight percentage points since 2020 and over a quarter (27%) finding themselves spending more impulsively whilst shopping online. Individuals spent £1,800 more on average over the year than last and people with very high digital engagement have on average been checking their bank accounts 49 times a month.
Consumers are increasingly using mobiles over other devices for online banking, with smartphone banking usage increasing from 59% to 65% since 2020. This is reflected in the fact that more than four-in-five (85%) of Internet users are confident in their online abilities.
The financial impact from the pandemic on many people’s lives has been significant, whether having been furloughed, having to financially support others, or remaining in employment and saving money through lockdown.
Lloyds Bank latest research shows that in 2020, 34% of the population had the financial reserves to cope for more than three months, should they have suffered a financial shock or suddenly lost their regular income. In 2021, the number has increased to 42%, meaning over 4 million people have more savings than they did pre pandemic.
However, with many suffering severe losses of income and increased borrowing needs, three in ten across the country are feeling financially overwhelmed. Nearly one-third (30%) of 18-29 year olds with the highest digital engagement, have their sleep affected by money worries.
Those unemployed, on long term sick leave and those shielding are more likely to struggle with managing their money and women are feeling less financially secure than men. In fact, only 57% of women feel on track to meet their future financial needs compared to 64% of men.
Across the board, almost 60% are now focusing on becoming debt free and reprioritising their day to day spend (59% and 58% respectively).
Stephen Noakes, Managing Director, Retail Transformation, Lloyds Bank, said “The impact of the past year has brought to the forefront just how much we now rely on our digital skills to manage our day to day lives. Digital engagement is increasing across the country with a significant increase in those who are using the Internet, now 95%, up from 92% last year.”
“Whilst this is hugely encouraging to see, it’s important that we don’t lose sight of the other 5% (2.6 million people) who are still offline which in many cases is exacerbating some of societies existing vulnerabilities, which is where more needs to be done to tackle this digital divide and help those still locked out post lockdown.”
“While the pandemic may have cast some uncertainty over our finances, it is encouraging that this has focused people’s attention on saving, becoming debt free and reprioritising how their money is spent. As part of our commitment to helping Britain recover, we have over 6,500 colleagues trained to support customers in building their financial resilience. In addition, the Lloyds Academy is actively helping people become more financially resilient by giving them the skills to be more in control of their money.”