Behavioral Design for Digital Financial Services

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How to increase engagement with products and services that build financial health

Mobile apps and other digital tools are helping more people manage their finances, saving them time and money. Real-time notifications help people avoid fees. Easy categorization of expenses support budgeting and goal setting. And automated transfers help people stay on track with debt reduction or saving for the future. The combination of convenience, affordability, and functionality that digital financial services offer can support greater financial health, particularly for low- and middle-income consumers whose needs may not be fully met by traditional financial products.

While the number of people using digital financial services in the United States is growing, take-up is far from universal across different kinds of services and income levels. For example, while over 70% of banking customers use online banking, only 38% use mobile banking apps. In addition, some mobile payments, like bill pay, are popular, but nearly half of respondents to a 2016 Pew survey had never heard of using mobile phones to send money to (or receive money from) other people. At lower levels of income, the use of mobile phones and smartphones generally decreases, reducing access to digital products.

What prevents people from adopting digital financial services? We know from behavioral science that the average consumer doesn’t scan the marketplace for ways to manage finances (which they’ve been doing for years), weigh costs and benefits of all the services out there, or avidly use “ideal” products once they’ve found them.

However, financial providers that use behavioral design can help customers find and use beneficial digital tools. Drawing on scientific findings about human behavior and expert interviews with fintech companies, banks, credit unions, and nonprofit organizations, we created an easy-to-use playbook that equips providers to do just that. The playbook focuses on four key strategies for overcoming common behavioral barriers to digital financial service adoption:

  • Capture attention. People have limited attention, and digital financial services may not enter their line of sight
  • Inspire trust and confidence. People may lack confidence in completely virtual financial transactions, and new providers without a known brand name may struggle to build trust
  • Simplify the decision. The seemingly unlimited set of product options on the market can be overwhelming to navigate
  • Facilitate action. The hassle of setting up online profiles and passwords can cause people to give up or postpone taking action, while Internet connectivity issues and limits on data usage make it even harder to follow through

This free resource brings together proven strategies for increasing the adoption of digital financial services. It’s organized using a set of clear steps, useful definitions of behavioral science principles, and real-world examples. Sharing this evidence-based approach with providers that interact with countless consumers can improve the design of more digital tools and ultimately strengthen financial health for people across the country.

This project is supported by JPMorgan Chase & Co.

Interested in learning more about applying behavioral science to digital financial services? Reach out to us at katy@ideas42.org.