Why did Lifetime ISAs miss their first-year government targets?

The government set a target of 200,000 LISAs opened in the first 12 months, yet the figures show that only 166,000 were opened.

Data and analytics company, GlobalData says that although these results could suggest that the target audience is not interested in saving, its own research shows that 62% of Generation Z and 60% of millennials prioritize ‘saving for the future’.

To increase sign up, GlobalData says building societies should use their branch network and 'expertise advice' to enable customers to apply for what could be perceived as a complex product, rather than only allowing savers to open a LISA online.

Oliver Wintle, banking analyst at GlobalData, said: “Rather than a lack of demand, one barrier to uptake could be the complexity of the product. Some MPs have called for the scheme to be scrapped altogether due to its complexity, and leading building society Nationwide has shunned LISAs for the same reason.

“Yet there are ways to tackle this issue. Building societies should be using their branch network to their advantage, both to offer advice to customers when opening LISAs and to cross-sell the product. Currently the likes of Skipton and Newcastle Building Society only let users open LISAs online. Nottingham Building Society is an example of a company bucking this trend, as it allows users to apply both in-branch and online.

“While LISAs missed their first-year government target, this is not because the target demographic does not want to save for the future. Building societies should use their multi-channel advantage over their digital-only competitors by enabling customers to open LISAs with branches.”