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Banking and savings trends of 2020
The coronavirus crisis has been a challenging time for all and the banking and savings industry is no exception. The pandemic has led to heightened uncertainty for many, at both the personal and international level. Since the UK lockdown came into force at the end of March, many consumers have seen their finances change significantly – some unfortunately faced the uncertainty of furloughs or redundancy, whereas others were fortunate enough to have the increased opportunity to save. As a result, many people have had to look more carefully at the way they manage their money and look for new ways to stay on top of their finances.

Head of Savings at RCI Bank, Tafari Smith, discusses these trends and how they will affect our finances and money habits, as well as how you can make the most out of your money.

 

1. The rise and rise of challenger savings banks

The speculation regarding a possible 0% or even negative Bank of England base rate means that more savers are shopping around and looking beyond the traditional incumbent banks in order to get a more competitive savings rate. Often called ‘challenger banks’ in the press, these online savings banks are covered by the FSCS, and in the case of RCI Bank usually focus entirely on offering high quality savings accounts.
 

2, Fixed term products more popular than ever

Throughout the lockdown period, we saw a shift in savings behaviour for those with smaller and moderate savings balances. Our customers opened more fixed term products than ever as a way of locking away money for longer in order to get a better interest rate on their money.
 

3. Importance of building an emergency fund

An emergency fund insures against life's unexpected expenses. Even as lockdown eases, we see that our customers are continuing to build their precautious savings. Having a robust emergency fund gives you peace of mind. Uncertainty over the coming months and years have many realising the importance of building up their own savings cushion, until there is more certainty about their finances.
 

4. Micro savers

Micro savings is investing smaller amounts regularly, to make it easier to start saving. It can be one of the most realistic ways to begin saving as you can build your saving habits day by day by saving £1- £5 which will build up over time without you noticing. Consumers have found this way of saving more realistic and easier to manage over the last few months.

 

 

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