Savvy consumers saving cash by seeking 'digital dividends'
Consumers are missing out on "digital dividends" worth as much as £2,000-plus a year each by not going online for a better deal, a new index has found.
The UK Consumer Digital Index from Lloyds Bank explores the links between how tech-savvy people are and the impact this has on their finances.
It found around 11 million UK adults have low levels of digital capability - meaning they are not making the most of online products, tools and services to save money such as comparison and consumer help websites, vouchers and discounts or auction websites.
The index is supported by digital skills charity Go ON UK, technology services company Accenture, and charity Toynbee Hall.
It warned that, without action, the financial divide will deepen between those who are using the internet to compare deals and those who are "digitally excluded".
The report was based on data from one million people from across the UK as well as a survey of more than 2,700 people.
It found 70% of people use the internet regularly to save money, typically saying they clawed back £62 per month or £744 per year in this way.
While £744 was the average digital dividend, more than one in 10 (11%) people who made savings online said they were saving more than £200 a month - adding up to annual savings of more than £2,400.
Asked where they are making the greatest online savings, 82% of internet users said they save on holidays, while 79% cut their insurance premium costs and 73% save on hobbies.
Meanwhile, 70% of internet users said they save money on clothing, 65% save on utility bills, 64% get cheaper transport costs and 42% save on groceries.
While the best deals are not always on the internet, comparing online prices with those on the high street can give consumers added bargaining power to negotiate better deals.
People can make significant savings online, irrespective of their financial circumstances, the report found. People on low incomes of less than £15,000 who used the internet to save money reported making average annual savings of £516.
This £516 annual saving could cover the cost of around 10 weekly food shops for a family, or fill the car with petrol 10 times over, or pay for nearly half a year's dual fuel bill, the report said.
The index estimates nearly two-thirds (61.5%) of UK adults, or 31.1 million people, are both digitally savvy and good at managing their money.
The report says there are 11.1 million people with low digital capability. Researchers looked at how often people go online in assessing how digitally capable they are, as well as what products and services they are using.
Meanwhile, an estimated 3.2 million people have both a low digital capability and a low financial capability, the report found.
People aged between 40 and 59 years old tended to be the most likely to have both high levels of financial and digital capability.
Younger people tended to be more digitally savvy but less so financially, while older age groups generally had more financial knowledge but less digital know-how.
Martha Lane Fox, who chairs Go ON UK, said: "This study clearly shows that being digitally capable provides tangible financial benefits."
Here is how much money digitally-savvy people said they save each month by going online, on average across the regions:
- East Midlands, £68
- East of England, £62
- London, £81
- North East, £61
- North West, £74
- Northern Ireland, £73
- South East, £73
- South West, £70
-Wales, £79
- West Midlands, £68
- Yorkshire and the Humber, £68
- Scotland, £67
