Money and Mental Health: FinTech Has Created Digital Overwhelm and That’s a Huge Barrier to Achieving Financial Wellbeing
Many people report feeling overwhelmed and confused when using Financial Apps and when trying to navigate the world of savings and investing. So, what is “overwhelm” and is it really a problem? It is a problem, and it also turns out to be a significant barrier for people when they’re trying to sort their Financial Lives out.
Overwhelm occurs when we’re faced with more mental demands than our thinking (“cognitive”) resources can handle. This leads to a state of emotional and mental overload and affects both our brain’s functioning and compromises our overall wellbeing.
Our Stress Response pathway in the brain is activated (think “fight, flight, freeze”) and robs essential resources from our executive (higher order thinking) functions. Overwhelm also reduces our working memory so new important information doesn’t sink in and we can’t “join the dots” to see how this helps build solutions we can work with. The brain’s attention narrows and is now centred on dealing with the perceived threat this FinTech App and the confusing information has created.
Eventually, there’s a risk that our emotional regulation struggles in the face of financial matters and money, and we become Anxious, Fearful (Phobia) or Depressed (sensing hopelessness and sadness).
Let’s have a look at the evidence around Digital Overwhelm and its impacts.
Academic and Industry Research
Financial Conduct Authority (FCA) Financial Lives Survey (2020) found that 55% of UK adults feel "overwhelmed" or "anxious" when dealing with financial services online, with higher percentages among millennials who interact with multiple digital financial platforms.
Money and Mental Health Policy Institute's "Seeing Through the Fog" report documented that 93% of people experiencing mental health problems spend more when experiencing symptoms, often via digital channels, and struggle with the cognitive overload of managing multiple financial apps.
Behavioural Insights Team research demonstrated that excessive choice in financial products leads to decision paralysis - the addition of each new financial app or service increased the likelihood of taking no action by approximately 10%.
Market Evidence
Deloitte's Digital Banking Maturity Survey revealed that the average UK millennial has 3-5 financial apps but actively uses only 1-2, indicating overwhelm rather than engagement.
Open Banking Implementation Entity (OBIE): research shows that despite high adoption of fintech solutions, actual financial outcomes for consumers haven't improved proportionally, suggesting technology alone isn't solving underlying issues.
Psychological Factors
Cambridge University's Digital Wellbeing Research Centre has documented the "paradox of choice" specifically in financial apps - millennials report wanting more financial tools but experiencing increased anxiety with each additional service.
The RSA's Economic Security Impact Accelerator found that digital financial tools often increase rather than decrease perceived complexity, particularly for those experiencing financial stress.
Neurological Impact
Research from King's College London demonstrates that financial decision-making under stress activates the amygdala (associated with emotional response) while suppressing activity in the prefrontal cortex (associated with rational decision-making). Digital overwhelm exacerbates this effect.
Journal of Consumer Research studies show that processing multiple financial data streams simultaneously reduces comprehension by up to 40%, with millennials no better at multitasking despite growing up with technology.
Often it’s the seemingly contradictory advice on a subject that most people have little understanding of that’s contributing to the confusion, and ultimately, to the overwhelm and cognitive shutdown.
Examples of Conflicting Fintech Advice Creating Consumer Confusion
UK consumers face numerous contradictions across financial apps and services that contribute to digital overwhelm:
Spending and Budgeting Conflicts
Monzo vs. Revolut: Monzo encourages envelope budgeting with "pots" that segregate money for different purposes, while Revolut promotes more fluid spending with rewards for certain merchant categories. Research from the Money and Pensions Service shows this creates cognitive dissonance about the "right" approach.
Emma vs. Yolt: Emma's algorithm often flags "unnecessary" subscriptions as wasteful, while Yolt's approach categorises similar expenditures as "lifestyle choices." The University of Cambridge's behavioural economics department found users of both apps reported increased guilt and confusion rather than clarity.
Investment Approach Contradictions
Nutmeg vs. Wealthify: Nutmeg's risk tolerance questionnaires typically lead younger users toward higher-risk portfolios based on time horizon, while Wealthify's algorithm often suggests more conservative approaches based on income volatility - creating uncertainty about the "correct" risk level despite similar user inputs.
Trading apps vs. RoboAdvisors: trading platforms like Freetrade promote active investment in individual stocks with notifications about market movements, while roboAdvisors like Moneyfarm simultaneously message the same users about the dangers of market timing and individual stock selection.
Debt Management Inconsistencies
Tally vs. Clearpay: debt consolidation app Tally advises users to avoid taking on new debt, while simultaneously, buy-now-pay-later service Clearpay sends the same consumers promotions for interest-free short-term borrowing, creating mixed messages about acceptable debt.
Credit Karma vs. Credit Cards: Credit Karma advises users to keep credit utilisation below 30% for score improvement, while affiliated credit card companies simultaneously encourage spending to "unlock rewards" - the Money Advice Service has documented this contradiction as particularly confusing.
Emergency Fund Contradictions
Plum vs. Moneybox: automated saving app Plum might recommend a three-month emergency fund based on fixed expenses, while Moneybox might suggest six months based on total spending for the same user profile. The FCA found this 100% variance in recommendations decreases trust in digital advice.
Housing Guidance Disparities
Habito vs. MoneySuperMarket: mortgage broker Habito's algorithms often suggest stretching affordability to maximum lending limits to get on the property ladder, while MoneySuperMarket's calculators emphasise conservative debt-to-income ratios. The Resolution Foundation has documented how these contradictions increase housing anxiety rather than clarify decisions.
Proliferating “specialised apps” is just adding to the problems and challenges consumers face. Instead, we need integrated financial wellbeing solutions that address the real challenges facing most savers and investors. We don’t need more financial products, apps or disparate advice. We need clarity, simplicity and achievable pathways amidst overwhelming economic pressures.
The evidence is clear: digital overwhelm and conflicting guidance are exacerbating rather than solving financial anxiety. The industry has a responsibility to build platforms that unify the financial experience, acknowledge psychological barriers, provide transparent trade-offs and celebrate micro-progress toward resilience. This isn't just about better UX or more features - it's about fundamentally re-imagining how technology can create financial confidence and capability for the 92% of UK adults currently underserved by traditional financial advice. The FinTech that succeeds will be the one that transforms from selling products to fostering genuine financial wellbeing through integrated, contextual and psychologically informed solutions.