British households could gain an extra £3,500 over a decade by using digital banking tools such as alerts for bills and money management nudges, according to a study by Lloyds Banking Group. The research estimates that widespread adoption of these tools could free up £100 billion for UK households over the next ten years.
The study examined the benefits of budgeting alerts that warn users before accounts go overdrawn, as well as notifications suggesting better mortgage or credit card deals. It found that the largest financial gains could come from investing excess cash, particularly benefiting mid-life savers and mortgage holders. Lower-income households could see the biggest proportional uplift through easier debt management and bill tracking.
Professor John Gathergood from the University of Nottingham conducted the economic modelling. The research comes amid uncertainty over the impact of the Middle East energy shock on the UK economy, with banks like Lloyds forecasting a worsening outlook for growth, inflation, and unemployment.
Jas Singh, head of consumer relationships at Lloyds’ retail bank, said he has not seen a surge in customers concerned about their jobs or finances, unlike during the pandemic or cost-of-living crisis. He noted that some customers ask about managing bills better, but there has been no significant increase in subscription cancellations.
Singh emphasised the need for a balanced approach to digital tools, ensuring prompts are personalised and relevant without being invasive. “It’s a fine balance between where we see we should lean in further and where it’s extremely reactive,” he said. He suggested that banks should avoid overly granular notifications, such as tracking coffee purchases, and instead focus on broader insights like monthly spending totals.
