Making the most of digital to improve financial lives

06 Mar 2017 |Written by Adam Micklethwaite

There is a close correlation between financial exclusion and digital exclusion.

The Basic Digital Skills 2015 report commissioned by doteveryone showed that 31% of people who earn less than £9,500 a year do not have all five basic digital skills, compared to 4% of those earning over £75,000 a year.

And the benefits of applying digital to money management are significant. According to the Lloyds Banking Group Consumer Digital Index, banking online can save people £744 a year. Low-income families (earning less than £15,000 a year) can save £516 a year.

Digital exclusion and financial exclusion remain big and inter-related - challenges and Good Things Foundation wants to find new ways to address both.

We’re already working closely with Lloyds Banking Group to provide dedicated learning resources in mobile and online banking, and to train Lloyds staff as Digital Champions, and we have now begun another exciting project in this space.

Last year the Money Advice Service launched the What Works Fund, a programme designed to explore new approaches to improving the financial capability of individuals.

This is part of the UK Financial Capability Strategy, launched in 2015 and with broad cross-sector support. The Strategy contained a detailed analysis of the financial capability of different segments of the UK population, clarifying the size of the challenge.

We’re delighted to be partnering with Toynbee Hall, UK experts in financial inclusion to deliver one of the first What Works Fund projects.

The project explores whether the use of digital financial products and services can help working-age people with low financial capability overcome the ‘poverty premium’ (the additional amounts low-income families have to pay for basic goods and services, for which estimates vary between £1,000 and £1,300).

Working with community organisations in the Online Centres Network, and with specialist resources from Toynbee Hall, the project is delivering financial capability interventions over an 8-week period designed to improve confidence and skills money management.

The heart of the project is testing whether an ‘assisted digital’ financial transaction - in other words, helping someone to carry out a ‘live’ financial transaction based on their needs - can make it more likely that the person continues to use digital financial products after the project has finished.

We are carrying out the project as a type of Randomised Controlled Trial (a Cluster Stepped Wedge Trial), meaning that the results will have a high level of statistical rigour. An RCT involves delivering both a control intervention and a treatment intervention and measuring the difference in impact between control and treatment.

It’s a ground-breaking piece of work in the financial inclusion landscape and one that we’re delighted to be taking forward. Over the course of the project, we should learn more about what works - and what doesn’t - in helping people make the most of digital to improve their financial situation and lead happier, financially healthier lives.