Consumer spending habits have changed, and the Customer Owned Banking Association (COBA) is urging the community to be wary of the risks this presents, particularly for vulnerable consumers.
New polling exploring consumer spending was commissioned by the peak body to coincide with the introduction of the new industry Code of Practice, which seeks to increase protections for customers experiencing vulnerability or disadvantage in the form of disability, elder abuse, or domestic violence.
The data confirmed cash is out and tap-and-go options are the top payment method (77%), however this trend is disconnecting consumers from the value of money and driving risky spending habits – especially for those facing financial difficulties.
Among people who use tap-and-go:
- Those who were financially struggling or in serious difficulty were more likely than those who were financially comfortable or secure to overspend (44% vs. 35%), appear to find it harder to keep track of spending (39% vs. 33%), or hesitate to use tap-and-go options (35% vs. 26%).
- More young people aged 18-34 compared to older people aged over 55 agreed that tap-and-go options make it easier to overspend (46% to 27%), harder to track spending (42% to 26%) and hesitate to use tap-and-go options (42% to 17%) compared to older people aged over 55.
Further, the data showed buy now pay later (BNPL) services were being used frequently by those already struggling with their finances, with 29 per cent of those financially struggling or in serious difficulty using BNPL services at least once a month. BNPL services were also used significantly by younger spenders, with 19 per cent of younger people using BNPL at least once a week compared to two per cent of older people.
Mike Lawrence, CEO of COBA, said the customer-owned banking industry’s new Code of Practice, coming into effect 31 October 2022, will provide additional protections for those experiencing vulnerability, including those who are struggling financially.
“As behaviours change through technology use, it is important that we, as customer-owned banks, remain across what these behavioural changes mean for customers’ financial health,” Lawrence said.
“Technologies such as digital payments services offer many benefits for customers, including a frictionless and convenient experience. However, as with any new technologies, understanding the impacts on consumer behaviour is essential to ensure consumers who are most vulnerable are supported.
“Customer-owned banks serve more than five million Australians and are committed to ensuring customers have access to services, products, and advice that have been built around a deeper understanding of nuanced vulnerabilities or financial challenges.
“Our new industry code provides significantly expanded protections for vulnerable customers, including commitments to:
take reasonable steps to make banking services accessible for individual customers in the areas in which our members operate, including older customers and First Nations Peoples, and adapt customer service standards where reasonably practicable, and take extra care for customers experiencing vulnerable circumstances, including in circumstances involving disability, elder abuse, or domestic violence.”
For further information, please contact media@coba.asn.au.