As the UK population becomes digitally-savvy from an increasingly younger age, it’s easy to assume tech take-up is evenly shared across every aspect of our lives.
In fact, while digital banking becomes ever more useful and user-friendly, students are as likely to be ignorant of the benefits as they are to feel clueless about money management.
The obvious way forward is to educate students in the use of technology for financial planning. Here are some of the key aspects to consider:
An old-school spreadsheet is a simple way to introduce the basic concepts of balancing income against expenditure and provides an opportunity to get students thinking about:
- Life + money goals: what do students want their cash to do for them now, in six months’, a year and five years from now?
- Priorities in daily spending and saving, and the bank account features that meet those needs
- Problem solving (or predicting future issues), and where to find advice or generate extra income
- Privacy and security: the low-tech option may have fewer frills, but doesn’t require third-party access to bank accounts or personal data
Starting out with a spreadsheet demonstrates what banking software can automate, without abdicating financial awareness or assuming a bot can replace financial responsibility!
Using tech to manage money
Digital banking has evolved far beyond budget trackers. Tools now straddle multiple devices, accounts and platforms.
Example: Money Dashboard.
Typically, a read-only service which puts the balance and transactions from multiple bank accounts in one place.
It shows categories for spending, and lets you add and track savings goals. It also encourages organisation and motivates saving.
These are current accounts with real-time balance updates (and phone alerts), quick customer support, and anytime access.
They’re built around mobile phone access, making them intuitive and familiar to younger users.
The big UK banks have their own apps, offering balance checking, money transfers and savings, but some other functions may still require logging in via PC, phone or even visiting in person.
Third-party money transfer apps (see Payfriendz) gamify the process through gifs and rewards for peer sign-up; they also actively promote money management as ‘fun’.
Offered by standalone apps (some even operate via Facebook messenger) as well as the big banks: it’s an automated process which connects to a bank account to monitor spending, identifies ‘spare change’, then moves that amount to a savings account.
For students who struggle to put cash aside, this removes the effort and mental blocks to saving.
Born from the foreign currency market, prepaid Mastercard functionality is useful at home or abroad. The cards work like any debit card, but you can only spend what you first load on to them, making them perfect for budgeting.
Considerations for digital banking
What kind of personal and spending data is collected and why? What are the implications? How safe is your data?
Consider about the significance of Financial Conduct Authority (FCA) and FSCS (Financial Services Compensation Scheme) membership.
It's also important to think about who else will help if something goes wrong (and what might go wrong?)
It’s easier than ever to spend cash online; prepaid cards (or services like PayPal) can give an extra layer of data protection if a retailer is hacked.
On the other hand, credit cards offer Section 75 protection.
Digital banking isn’t yet inclusive of overdrafts and other student-friendly facilities, so there’s a conversation to be had about the pros and cons of alternative types of credit.
Some providers and services are free, some aren’t. What’s the cost implication, and when is it worth paying?
Using tech to be better off
Digital technology can make money easy to think about and organise, which in itself is a solid reason for up-take, but it can also leave students better off.
With fewer overheads, some online-only products come with bonuses for opening accounts and in-credit interest rates far higher than with traditional high street banks.
Users already familiar with incentives for peer sign-up (the FarmVille effect!) can secure better interest rates, rewards and bonuses for getting friends and family to sign up to apps and banking products.
As well as encouraging saving, the new breed of banking apps are competitively-priced, with fewer charges for shopping, spending or receiving money from abroad. Over time, that can add up to substantial savings.
Digital banking will continue growing. As with traditional banking, credit/debt and student finance, those who find out how it works, and how it can work for them, are likely to be better off.
While digital banking promises new functionality, the basics haven’t changed. Getting – and staying – on top of your money still relies on the same attitudes and awareness. Now’s the time to have the conversation!