Context

Lloyds Bank believes that digital participation is critical for life in the UK, and that financial services should therefore be inclusive. It has been running the Consumer Digital Index since 2016 to understand the UK’s digital and financial lives and shape initiatives to make a positive impact on consumers. This is the ninth report in the series.

Digital participation is not explicitly defined in the report but is understood here to refer to people’s digital capability (skills and confidence). Financial capability is referred to as a measure of financial health, indicating how efficiently consumers use the money available to them.

The study

The study used transactional data from one million consumers across the UK to provide measures of digital and financial capability.

• Digital capability was reported as a single score based on three composite measures: interactions (making up 62% of the index), spend (24%) and technology (14%).
• Financial capability was also reported as a single score, measured using four equally-weighted factors:
  • control over day-to-day finances
  • ability to absorb a financial shock
  • financial freedom to make choices to enjoy life
  • being on track to meet financial goals.

From the transactional data set, a subset of 2,700 consumers aged 18 to 70 were also surveyed by phone in March to May 2024, with a booster sample of 100 aged 71 to 79 also being surveyed. For around 2,700 respondents in total, their survey data were matched anonymously to their transactional data. Findings were benchmarked to 2016, the first year of the index.

Key findings

• Digital capability segmentation: very low: 23%, low: 9%, high: 40%, and very high: 27%.
  • The number of people with very high digital capability was higher in 2024 than in 2020.
  • More than eight in ten of those with very high digital capability had used the Internet to save money/shop around for cheaper deals and more than six in ten had saved money through online loyalty schemes.
  • 16% of consumers thought the internet is too complicated.
• Financial capability segmentation: very low: 8%, low: 49%, high: 36%, and very high: 7%.
  • Those with the highest digital and financial capability saved four times as often, and saved £1,100 a year more on average, than those in the lowest groups.
• Making improvements: 77% of respondents said they would welcome help to become more financially confident.
  • Over half of those who had already improved their digital skills in the last year thought they still needed further improvement.
  • 81% of all adults said they wanted to learn online safety skills directly from their banks.
  • One in five respondents said they helped others with making payments, finding balance and statements or paying in cheques.

Points to consider

Methodological strengths or limitations

• The authors note that the methodology for measuring digital capability was reviewed in 2020 and that for certain measures direct comparisons to 2019, 2020 and 2021 could not be made.
• The report does not state explicitly that the transactional data, and hence the survey data, were based on Lloyds bank customers (and in turn, all of their customers), although this is assumed here. As such, and at best, the data should be treated as being representative of Lloyds Bank customers, rather than the population of the UK.
• Population estimates given in the report were extrapolated from sample percentages using Office for National Statistics population estimates for UK adults aged 18 and over. These estimates should be treated with caution as, notwithstanding the representativeness point above, a confidence interval (margin of error) will apply to these.
• Survey sample and subsample sizes were modest and statistical significance were not reported.
• The context of survey completion as a Lloyds customer may have biased some results.

Applicability

• The findings should be of interest to stakeholders with an interest in the digital and financial capability of UK banking customers, especially policymakers and industry representatives.

Relevance

• The findings are relevant given important interactions between financial capability and digital capability for improving people’s financial wellbeing.

Generalisation/transferability

• The findings should generalise reasonably well within the UK context to customers of other large high-street banks.