Covid-19 and financial vulnerability: What did we learn from contextual research?

In this blog, researcher Leonie shares what we learnt from conducting contextual research on the impact of Covid-19 on Fair Finance customers’ lives and finances.


Meeting Mary

In my capacity as a Researcher for Shift, I recently had the opportunity to interview Mary*, a 65-year-old woman from Ghana, who works as a care assistant in a nursing home in north-east London. Like so many families and individuals in the UK, Mary – who has lived alone ever since her adult children moved to the US – has been pushed into food poverty as a result of Covid-19. Before the pandemic hit she was working for 30 hours a week on a minimum hourly wage, just about scraping by on roughly £1000 per month.

She was tired, she told me. Her feet hurt from working a full shift at the nursing home that day on an empty stomach. Her work shoes had holes in them and were letting in water on rainy days, but she couldn’t afford new ones.


By May, Covid-19 had already wrought havoc on the nursing home in which she worked: most of her clients had been claimed by the disease. “That nasty virus swept like wildfire through the home,” Mary told me. As her clients passed away, Mary’s hours were reduced: by June, she was earning less than £500 per month, and – as she was no longer able to afford basic amenities – her kitchen was bare. “I am going hungry sometimes,” Mary said. “What do I have in my fridge at the moment? A loaf of bread, some tea bags – that’s all…” She was tired, she told me. Her feet hurt from working a full shift at the nursing home that day on an empty stomach. Her work shoes had holes in them and were letting in water on rainy days, but she couldn’t afford new ones.


The role of research

I was speaking to Mary as part of a piece of contextual user research for Fair Finance, an ethical lending company, to learn about how its customers – almost all of whom would be considered by the Financial Control Authority to be those that are financially vulnerable – have been impacted by Covid-19. The research took place from May to August 2020 and involved interviewing, by phone and via Zoom, a small but representative sample of Fair Finance customers about how the pandemic had affected their lives and finances, and how they anticipated that changing in the coming months.

How might accounts like Mary’s be helpful for financial support services like Fair Finance? The insights shared below not only capture what we learnt about the pandemic’s impact on people’s financial wellbeing, but also why – in the context of a fast-evolving global crisis where the daily reportage of statistics often obscures the messy reality of real lives – it is crucial that services, professionals and businesses create the space for empathic engagement with people’s lived experiences. User and design research is well-placed to enable the deeper connection and understanding needed for us to develop support systems that really work.


Key research insights on the impact of Covid-19

Here we share four key insights from our contextual research. For an overview, check out this summary website we put together with Fair Finance or read the full report here.

Insight 01

Contextual research helps us to to connect with and understand people’s lived experiences, prompting us to engage as humans in the urgent question of how we make services better.

While we have changed the names of the research participants to protect their privacy, in our research outputs we have tried as far as possible to capture the authentic voices of the people we spoke to. The profiles that accompany the report are not anonymised personas (which I’ve never really been keen on for the reasons set out in this excellent piece from the Ministry of Justice), but the stories of real people that convey the manifold ways in which they have been affected by Covid-19.

For example, we can follow people’s ‘money management journeys’ (like Ana-Maria’s shows here), as they move from surviving to struggling; we read about the ways in which incomes and debt levels have been impacted by changes wrought by the pandemic as it unfolds; we immerse ourselves in their dreams and aspirations, as well as their hopes and fears.

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One husband and wife – a Romanian couple who live with their two daughters in London – were shocked by how sudden and swift the impact of the pandemic was on their financial resilience back in March. Both self-employed – an Uber driver and a receptionist – their combined income plummeted from more than £4500 per month to less than £1000 in a matter of weeks. They were already in high levels of unsecured debts as they headed into the pandemic, having taken out a large bank loan to pay for an expensive operation. Interests on these debts alone totalled more than £1000 per month.

The combination of high unsecured debts and insecure employment in the context of a pandemic is a particularly toxic and dangerous one that has plunged thousands of families into financial difficulty. Seeking to listen to the individual stories behind these numbers reminds us that the work of trying to build effective services and support systems is not just about responding to these numbers: it is a human-to-human, imperative practice of care that is about helping and protecting those people that we see and interact with everyday – taxi drivers, cleaners, care workers, shop workers, neighbours, and friends.

Key takeaway

The pandemic has had a particularly serious impact on people with high financial outgoings due to high private rents, unsecured debts and high numbers of dependents. Even where individuals and families may have been just about making ends meet before the pandemic hit, the loss of jobs, falls in income and rises in food and fuel bills has tipped these people into situations that are often untenable, with impacts ranging between spiralling debts, risk of eviction and homelessness, and associated health impacts such as anxiety and depression.


Insight 02

Contextual research helps us to challenge overly simplistic assumptions and categories, encouraging us instead to embrace nuance and tailor services to take into account differing mindsets, behaviours and awareness.

One of the Fair Finance staff members that we spoke to upon embarking on this work gloomily pronounced that he believed there was “a whole lot of pain out there”. An already financially vulnerable customer base would of course have been hit harder by the pandemic than the rest of the population. He admitted that this was an assumption on his part, and indeed our research revealed it to be only partially true: in fact, we found a wide variety of ways in which the ‘financially vulnerable’ have been impacted, with some even seeing themselves accumulating savings – in some cases, for the first time ever – as a result of reduced spending during lockdown.

Through our research we identified three segments of Fair Finance customers that have been differently impacted:

Stretched but stable (for now)

Used to living with financial vulnerability and largely dependent on benefits, this group have not seen significant changes to their finances as a result of Covid-19, since their benefits entitlements have remained the same. However, they are often surviving on very limited means, and the recession poses a threat to their aspirations of finding secure, well-paid work and building a better life.


Squeezed and struggling more

In low paid, insecure work, this group have been hit hard by Covid-19. Reduced hours and lost jobs have caused this group to fall further into debt and, in some cases, forced them to apply for benefits support for the first time. Many of the members of this group are in ‘firefighter mode’, struggling to make the right decisions in the context of ongoing uncertainty and panic. Many are also afraid of and ashamed of having to navigate the benefits system, and often leaving this until too late.


Accidental savers

For the first time in their lives, this group have found themselves with money ‘to spare’ as a result of the social restrictions enforced by lockdown. Rather than seeing these savings as an opportunity to make moves towards building their financial stability, Accidental Savers view this money as a temporary bonus that’s likely to evaporate in the near future. Not being accustomed to having financial surplus, this group often lack the confidence and self-belief around being able to make positive changes to their financial habits.

Key takeaway

Our research revealed that there has been a wide range of experiences and impacts of Covid-19, even amongst those who are already financially vulnerable – it is important to seek to understand the different ways in which people have been affected by, and are responding to, the crisis, and to tailor support to different needs, priorities, aspirations and mindsets.


Insight 03

Contextual research encourages us to see and understand the bigger picture.

Contextual research helps you to see and to ‘think bigger’ than the narrow issues that you’re exploring, and to understand the ‘why’ as well as the ‘what.’ We know for example that Covid-19 has led to an increase in financial vulnerability across the UK, and this is in large part due to economic and structural factors: insecure, low paid work; high housing costs and private rents; rising food and fuel prices and wage stagnation; rising levels of personal debt.

However, our research highlighted the extent to which financial resilience is about far more than just people’s monetary ingoings and outgoings; it is also about people’s (lack of) access to social capital, their attitudes and behaviours around money, and their mental and physical health.

During the research we spoke for example to Effia, a single Mum of three children, who struggled to go to work as a cleaner in a hospital when schools closed, thus losing out on vital income. Another research participant, David, who works as a frontline support worker in the NHS on a zero hours contract, became anxious about what it would mean for his family if he contracted the virus and was (even if for only a short time) unable to work, since he is the main earner in a family of five. This led to risk-averse behaviours, including reluctance to use some savings that he accumulated during lockdown to pay off expensive debts: “you never know – we might need that money one day.”

Key takeaway

It’s not (just) about the money: financial vulnerability and resilience are comprised of a hidden web of interconnected risk and protective factors (see below) – including mental and physical health, social connectedness, and behaviours and attitudes – the fragility of which has been starkly exposed and exacerbated by Covid-19.

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Insight 04

Contextual research helps us to reframe familiar problems in new, more asset-based ways.

The concept of the asset-based reframing of problems is not new: writers and thinkers like Hilary Cottam in her book Radical Help have, for many years, extolled both the virtues and importance of recognising the strengths and opportunities that often lie in ostensible challenges.

The impact that the pandemic has had on the lives and finances of the ‘financially vulnerable’ is no exception: while financial difficulty is widespread, our research also revealed that – in a more positive sense – Covid-19 has shed a light on the extraordinary resilience and resourcefulness of individuals, families and communities, and led to changes of habit and reassessment of priorities. In these changes lies opportunity for redefinition and reinvention, both in the lives and behaviours of individuals and in the support systems that surround them.

One insight from the research particularly stands out: no matter what people are going through as a result of the pandemic, their finances are only one small part of who they are. A strong beat of ambition ran throughout the interviews. The research participants wanted to find work that would give them independence and an improved quality of life; they wanted to retrain; they wanted to apply for their British passport; they wanted to be a better parent or friend. Even in the most serious cases of financial hardship caused by the pandemic, people had held onto and even become more resolute in their sense of the importance of these ambitions.

What these findings suggest is that, to maximise their effectiveness and continue to build honest, trusting relationships with customers, it is important that financial support services are designed with the whole person in mind, creating spaces for meaningful conversations around what customers feel they need, and respecting and seeking to support the directions in which they want to travel – through the turbulences wrought by the pandemic and far beyond.

Key takeaway

People may not always identify with the label of financial vulnerability: their sense of identity extends far beyond their finances. Financial support services must find ways of connecting with and supporting customers that seek to value and understand people’s aspirations and priorities in truly asset-based and relational ways.


Want to find out more? Check out this summary website we put together with Fair Finance or read the full report here. Get in touch with Matt on if you’re interested in partnering with Shift on contextual research or work relating to financial wellbeing.