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Digital banking boosts balances for young savers

16th May 2016 Print

According to the latest online research from Halifax, young adults say digital banking is helping them to boost their savings balances. Four out of five young savers (18 to 24 year olds with savings accounts) who use online (81%) and mobile (82%) banking say it makes it easier to save money. Around three in five say it makes them more likely to move money into their savings account (59% online and 65% mobile) and around four in five say it makes them more aware of their savings balance (80% online and 84% mobile).

Halifax’s Generation Save report shows that compared with the general population, young savers are much more switched on to the money management benefits that digital banking can bring. The over 55s are the least likely to recognise these benefits, with only one in four (25%) who use mobile banking saying it makes them more inclined to move money into their savings, compared to over two thirds (65%) of young savers.

Giles Martin, Head of Halifax Savings said: “This research tells us that online and mobile banking is actually helping a lot of young people to save. It’s clear that having easy real-time access to their savings balance, whether in their pocket or on their PC, is keeping saving front of mind. This is great news if it means that young people are getting into good savings habits early in life, particularly at a time when reaching those key milestones like buying a first car or first home can feel out of reach for many.”

Everything in one place

On average, just under two thirds (63%) of savers hold an account with a different bank or building society to their main current account provider. However this is the case for a little over a third (37%) of 18 to 24 year olds. One reason many young people are holding all their accounts in one place could be their preference towards being able to view all of their accounts together. Half (49%) of 18 to 24 year olds say they prefer to hold their savings with the same provider as their current account so they can do just that, compared to two fifths (39%) of over 55s and 44% of the general population.

Channel of choice       

Clearly the most technologically savvy age group, 18 to 24 year olds prefer to open their savings accounts via digital means (online and mobile banking), with over seven in ten (74%) choosing to do so, according to Halifax customer data. The over 65s favour branch openings, with three in five (60%) choosing this method and a third (30%) opting for the digital route. Of all the savings accounts opened via digital, the greatest proportion are opened by customers aged 18 to 34 (37%). Conversely, of all savings accounts opened via telephone banking, over half (54%) are opened by the over 55s.

Reinforcing this, 18 to 24 year olds are making more deposits than any other age group via digital, but their balances are lower, likely due to lower levels of disposable income. Making more deposits implies greater engagement and interaction between accounts, which correlates with the finding that this age group are more aware of their savings balance and more likely to move money into their savings when accessing regularly via digital banking.

Digital natives

Mobile banking is undoubtedly becoming much more popular but more of the general public use online banking than mobile to access their savings accounts. 85% of respondents with a savings account use online banking, while less than half that number (41%) use mobile banking. However, when broken down by age, there is a vast difference between the younger and older generations, particularly in relation to mobile banking. Of those with savings accounts, nine in ten (90%) 18 to 24 year olds and eight in ten (81%) of over 55s use online banking to access their savings, but by comparison, three in five (60%) of 18 to 24 year olds use mobile banking, compared to just over one in five (23%) of over 55s.