• David Henderson

The Rise Of Save Now Buy Later


It is estimated in the UK that only around 30% of the population has life insurance. Cost and perceived complexity play their part. Like making a will or getting that dental checkup, we all tend to ignore those important but non-urgent tasks, like buying life insurance. Marketers try to pull on the heart strings with the line “for just the price of a daily cup of coffee you can secure your family's future”. Sounds simple and an emotional tug no brainer. However, habits are hard to change, especially around the perceived essential of a morning coffee!


Historically, Pensions have had a similar problem. Everyone knows they need one, but because the money is locked away until retirement, creating that habit to save has always been hard. Thankfully, in the UK the success of ‘Automatic Enrolment’ has been in getting more people saving into private pensions – with over 10 million employees paying into a workplace pension since 2012. Auto Enrolment works so well because in addition to the employer contributions the individual doesn’t really have to make a decision or change their behaviour. The money is gone before they see it. You cannot spend what you don’t see.


Simplicity of design plays an important part in helping individuals manage their finances and create better outcomes. Many companies are designing new features that can help develop habits and better financial planning behaviour. In fact, many have gone a step further, making saving so simple that it doesn’t even require building a regular habit. Users can simply setup one of many saving features available and the product does the rest.


The simplest example of this is the wave of apps and banks that are helping individuals to ‘Round Up’ their transactions into savings pots. Going back to the morning coffee example, most apps or accounts will round up to the nearest pound – so, for example, if you buy a coffee for £2.70, your app will take £3 out of your account, and put 30p into your savings pot, and that soon adds up.


Revolut’s feature rounds up your card transactions to the nearest pound and saves the difference. Money is deposited in Revolut Savings “Vaults”. The app allows you to save this cash in different currencies, including cryptocurrencies and commodities. I’ve used this feature for some time now, setting goals like ‘Holiday’ as an easy way to put money aside. Upgrade to Revolut Metal and you can also get 1% cash back.


With the Monzo app, you can set savings goals in “Pots”, round up your spare change and automatically save the difference into a savings pot you can name to match your specific goal. Similarly, Starling offers the “Spaces’ to squirrel away your spare change each time you spend.


As with most things the challenger banks do, big banks follow. With Lloyds, Nationwide and Bank of Scotland, to name just a few, of the big banks offering round up features.


For those who are with banks that don’t offer the round up feature, there’s a good range of apps out there that help individuals create better saving habits.


Plum works by linking to your bank account (it supports all major UK banks) and analyses your spending and transactions to work out the best amount to put away every week. You determine how much you want Plum to save and can ask it to stop saving at any time. Plum has some fun deposit features such as Round Ups, Pay Days, 52-Week Saving Challenge, and Rainy Day Savings Rule.


Curve enables you to spend money from any of your accounts using just one card. It allows you to save money through fair exchange rates and fee-free ATM withdrawals when you travel abroad, gives you access to your spending history at any given time and notifies you with every payment to help keep track of your finances. You can link the Curve card to Apple, Google, or Samsung Pay and benefit from compatibility with all Mastercard and Visa cards.


Similar to Plum, Chip saves you money by analysing your bank transactions, identifying spare change and automatically setting it aside for you. By adjusting the saving level, you can decide whether you want to take things at a steady pace or go full speed ahead and save money faster. You can review and tweak each auto-save before Chip moves your money or choose to skip a save altogether. Chip's technology will learn from your tweaks and adjust your future saves to fit. Chip has some fun deposit features such as Payday Put Away and Save Streaks. The former allows Chip to automatically move a custom amount of money aside on your specific payday each month. The latter tracks the number of consecutive days you've saved, a ‘Save Streak’.


Moneybox's round up feature allows you to save spare change by rounding up your card transactions to the nearest pound and saving the difference. You can choose to save your money in either a 45-Day Notice Account or a 95-Day Notice Account. If you want to take a break from saving or feel the app is putting away too much, you can always turn off round ups.


All the above apps and features help develop better savings habits. It is reported in the UK roughly 41% have only enough to cover living costs for one month and a third of Brits have less than £600 in savings. Sharp increases to the cost of living in recent months only exacerbates the need to create a better savings culture.


Last week the Financial Times reported on the increase in UK households dealing with high energy costs and have been getting talked into Buy Now, Pay Later (BNPL) programs in what energy and debt advice groups have said is a “really worrying” development. According to the Q4 2021 BNPL Survey, BNPL payments in the United Kingdom are expected to grow by 50.5% on an annual basis to reach £2,4231M in 2022.


It seems that at present when the world is focusing on the BNPL market we need a mindset shift to “Save Now, Buy Later” (SNBL) to help people save where they can, creating better behaviours and outcomes for consumers for the future.


This rapidly changing market is hard to keep up to date with, as new FinTech’s pop up every day and existing companies innovate and build new features at a rapid pace. At Behind Login, we specialise in deep-dive competitor research, working with real users of all the FS & FinTech platforms globally to understand the digital products they are using and how they are evolving.


Get in touch if you want to stay ahead in the rapidly changing market.