Banking data: new insights on society
Research highlights financial vulnerability among people in their 50s and 60s
One of Smart Data Research UK’s four thematic pillars is productivity and prosperity. We are interested in how smart data can help us understand what drives growth and innovation. How it can help plan infrastructure for different communities across the UK and tackle inequalities.
The challenge of pairing data analysis with social transformation is at the heart of the work being led by the team at Smart Data Foundry. Its data scientists are on a mission to unlock the transformative power of financial data to enrich and enhance the lives of people and communities.
In 2021, Smart Data Foundry embarked on a new piece of research to examine the risk of financial vulnerability among people in their 50s and 60s. They wanted to understand what changes could be made to improve financial security in later life.
The research team consisted of researchers from the University of Edinburgh’s Business School and School of Informatics. They received exclusive access to near real-time financial data, provided in a secure and de-identified format by NatWest Group. The abrdn Financial Fairness Trust sponsored the research.
Key findings
Significant findings from the project include:
- Adults aged 50 – 54 are substantially more at risk of financial vulnerability than older retired individuals
- Retired individuals are withdrawing large sums from their pension pots when already struggling financially, more than doubling their risk of financial vulnerability
- The largest regional concentrations of individuals at risk are in Greater London and the North East
Research methods
Quantitive
The researchers used a branch of statistical modelling called Survival Analysis to explore aggregated banking transaction data from a sample of NatWest Group customers. The data came from 453,604 anonymised individuals’ current accounts, generated between January 2019 and December 2021.
Qualitative
The researchers also spoke to 62 individuals actively involved in providing support and advice to the public. Most were front-line advisers working for voluntary organisations before and during the COVID-19 pandemic. A mix of online focus groups and interviews took place during 2021.
Impact
The outcome of the research was a range of policy recommendations presented to government and regulators aimed at improving the employment prospects of older people and improving access to advice on pensions planning for those on lower incomes.
The research also received coverage in the national press and on radio which helped raise awareness.
“We set out to understand the financial vulnerability amongst those in their 50s and 60s and have been surprised by the bleak picture that the data paints…The richness of the data means we have been able to make policy recommendations and identify opportunities for innovation in the financial services and fintech sector to help individuals better manage their finances.”
Dr Lynne Robertson-Rose, Lead researcher
“Making decisions about your pension is tricky to navigate, and for those on lower incomes, advice is too expensive. Government needs to improve access to advice on pensions planning for those on lower incomes to avoid a living standards catastrophe.”
Karen Barker, Head of Policy and Research at abrdn Financial Fairness Trust
Read the report here: https://cms.smartdatafoundry.com/wp-content/uploads/2022/08/ABRDN-Older-Workers-Later-Lives.-Short-Report-SDF-SmallFile.pdf
About Smart Data Foundry
Smart Data Foundry is seeking to unlock the power of financial data to tackle the biggest issues to create positive impact across society, the economy and the environment. A subsidiary of the University of Edinburgh, it is an independent, not-for-profit organisation. It is supported by UK Research and Innovation (UKRI) and Data Driven Innovation.
