It’s no secret that saving money is a good idea. Even when funds are tight, putting away a small amount on a regular basis can mitigate unforeseen emergencies and enable people to make investments toward building long-term financial stability. Despite these realities, and the best intentions, individuals often fail to take steps to save for the future.
ideas42 collaborated with the Grameen Foundation and CARD Bank, Inc. to test out an innovative solution to this problem with a pilot program in the Philippines – a country where only 26 percent of adults use formal financial services and nearly 80 percent do not have a deposit savings account. There is a white paper that details the full project and its outcomes.
The team determined that by applying behavioral design principles, and introducing a relatively inexpensive set of behavioral levers to address bottlenecks at key stages of opening and interacting with a savings account, significant impacts on savings rates could be achieved.
The results were dramatic. A randomized controlled trial found that clients who were exposed to the new designs upon opening a savings account made initial deposits that were 15% larger than the deposits of those who opened accounts using the standard process. The design also made clients 73% more likely to initiate a transaction in the new account, and these clients made smaller and more frequent ongoing deposits as well as smaller withdrawals. Most importantly, the intervention seems to have had the effect of increasing balances by 37% compared to the control group over the course of the eight-week pilot.
The pilot project with CARD Bank not only produced successful results with regards to savings behaviors, but also generated several useful lessons about microsavings and behavioral design that can be applied to future product and program innovations. The insights gleaned from the project have the potential to significantly impact approaches that address poverty across the world on a large scale.