5 big things we have learned about people and money
“My friends and I do not talk about finance, even in my family we don’t talk about money”
Research participant
Play have been working on some personal finance and Fintech products and services over the past 18 months. Some of these help people to spread the cost of larger purchases over time. Others encouraged financial well being via spending analysis. All were designed to drive people towards their saving and spending goals.
This work covered a range of socio economic groups. It has been massively interesting and at times heart wrenching. We have used a selection of our in house design techniques such as Jobs to Be Done, service design and 5 day sprints. We have also fine tuned our qualitative and quantitative data collection tools. This helped us to elicit insight while discussing difficult topics.
Here are a few of the things we have learnt along the way. We feel these are key whenever designing for people and their money.
Paradox of Choice
A term coined by Barry Schwartz in his book The Paradox of Choice — Why More is Less. Schwartz sides with the opinions of psychologists David Myers and Robert Lane. It concludes that abundance of choice often leads to depression and feelings of loneliness.
As human beings we have an innate need to feel in control of our own destiny. We often feel, despite evidence to the contrary, that we are the best people to make our decisions. We recently explored a concept that gave customers control over their personal loan parameters. The prototype showed participants how small changes to their loan terms would impact repayments. More importantly it highlighted improvements in their overall financial well being.
Introducing this element of choice actually lead to increased anxiety and confusion. Although, participants felt a product that offered this level of choice was morally reputable. They even described it as ‘on their side’. They struggled to use the tool to determine the best package for their situation. Lacking the industry specific insight and expertise to make a confident decision.
We discovered the experience should be more akin to speaking to a sales person. The UI should be guiding people to the right decision. It should do this based on expertise as well as an understanding of their situation. By doing this we have a customer who feels empowered and confident in their own decisions. We believe that this experience can and should be automated. But it needs to take learnings from the balance of choice versus anxiety and mimic real human interaction.
Of course design can go some way to addressing this problem. We can use existing design patterns to give to solve this problem. For example the Centre Stage Effect gives the illusion of choice. While subtly guiding users to the best product for them.
Takeaway
Although, people state they want flexibility, what they actually want is to make good decisions.
Respect individuality
When it comes to finances people do not want to be compared to others. Or put in what we determine algorithmically to be similar situations. For example “people like you spend X on their electricity”. Although we explained this was based on a number of factors and patterns, the response was the same. “That may be the case but I am different to other people because….”. This got stronger when dealing with difficult topics such as debt or saving goals.
The exception to this was e-commerce products, where it was perceived as useful to be guided by peers when feeling uncertain. This is also a known psychological phenomenon called the Entourage Effect. Where we seek the opinions of others when we struggle to make decisions, even if we do not know them personally.
Individuals who were ‘better’ in a given comparison, took small pleasure from it. Although this was short lived. For example “people like you typically spend more on their groceries than you do”. This gave a brief positive feeling, which waned quickly and did not result in any further action such as cutting expenditure. In contrast, playing back individual progress over time was a more effective motivator towards positive actions.
We tested this assumption in positive and negative financial situations. In all situations people had a strong negative reaction to the comparison.
Takeaway
Individuality matters more so when it comes to important matters like finances.
Habitual behaviour
Almost always participants used the same services and spoke to the same people about financial decisions. For some this was turning to a partner or parent for reassurance and insight. For others it was going to the same service provider that they had used for years. Whether or not this product / service was a good fit for their needs.
Some participants spent large amounts of time researching before they committed. They did this on a variety of channels to ensure they were making the right decision. The majority of participants however had a single goto website or person who they reached out to for advice.
We know products or services that require behavioural change will struggle to establish uptake. This seems particularly true when it comes to financial products and services. People stick with banks and accounts which offer little interest despite better offers. Some of this is due to perceived effort, while some is due to fear of uncertainty.
In the Take Five Program, 35% of people polled came away believing they should eat 5 fruits and vegetables a day. On the face of it the program was effective. But when asked what people were actually eating the data changes. Only 11% of people reported that they met this goal. In reality the program changed people’s intentions, but did not overrule habitual behaviours.
Studies have shown large lifestyle changes such as weddings, are key moments to build behavioural changes. Moving house, a growing family, retirement and divorce are all examples of large scale lifestyle changes. By positioning financial products and services around these moments we are able to capitalise on an opportunity. This could potentially drive a behavioural shift.
We also know that repetition is key to building loyalty and causing behavioural shifts. Regular contextual touch points can help users to build a habitual relationship with the product or service. These could include but are not limited to actionable emails, notifications and in-app activities
The final step is to build brand advocacy. This ensures the product / service is worthy of being recommended to a friend, allowing it to ultimately break into the space occupied by competitors. Don’t forget competitors could include the ‘bank of mum and dad’.
Takeaway
People are creatures of habit. They will often go with recommendations or existing services despite better offers.
Reaching the hard to reach
While working on financial well being products, we identified something really important and difficult. Individuals most likely to benefit from budgeting / debt management tools are the least likely to use them. As a society we don’t typically talk about money in the first place “it’s just not done”. Think about it, it is still not uncommon to have no clue what your parents or partner earns.
We are also seeing a strong rise in the curated self. Individuals are heavily crafting what they put out on social media or discussing with friends. This allows a person to present the version of themselves they want to be as opposed to who they actually are. According to a report in the Guardian, social media has “given us online status anxiety, a pervasive fear of missing out”. Which they also suggest may be affecting our mental health. We have noticed the dual Instagram account phenomenon. Where users have two Instagram accounts, one reserved for their close friends and another for anyone who wishes to follow them.
For individuals in financial difficulty this masking can result in a never ending spiral. Resulting in worsening debt and anxiety.
Past experiences often contribute to heightened anxiety and distrust in financial products and services. Participants often misunderstood some aspects of financial services such as credit scores.
To reach this audience, it is essential that all aspects of the offering are understandable and has the right level of detail. We found that progressively revealing complex information at the point of need was better than front loading the product.
We also noticed that participants often had false ideas about their actual financial situation. Sometimes magnifying the amount of debt they were actually in. Leading them to create false limitations on the options available to them.
Takeaway
People who are bad with money, do not talk about money and will be difficult to reach with financial wellbeing products.
Looking to the future is hard when the road is rough
Having conducted many studies with a vast array of participants, we have begun to see a pattern. This pattern applies to specific groups of individuals who are in difficult financial situations. These groups focus on covering their immediate costs. Which in turn makes looking beyond that seems futile and a low priority.
Approaching these groups and trying to offer them help can often be seen as intrusive and an invasion of their privacy. It’s important to consider at this stage how to approach people in this position. Our findings also suggest that they are aware of their issues and the fact they would benefit from help. They were simply unwilling or unable to reach out for it.
This is not to say this audience is underserved. There are many services and products out there that could benefit them in many ways. We suspect the way they are communicated to the end user might be the problem.
However let’s not forget everyone else. Financially stable groups that we conducted studies with could still benefit from financial management tools. Unlike the previous group they are better positioned to consider their financial future. But this can still be a second thought for many. They are happy and content and it can often be easy to forget about such ‘trivial’ things.
Another phenomenon related to our ability to plan future finances can be found in the ‘end of history illusion’. Psychologist Dan Gilbert describes a similar effect during his Ted talk on ‘The psychology of your future self’. He states that at every stage of our lives we make decisions that will profoundly influence the lives of the people we’re going to become. When we become those people, we’re not always thrilled with the decisions we made. This can often be the case when it comes to planning our future from a financial point of view.
Most of us can remember who we were 10 years ago. But we find it hard to imagine who we’re going to be. We mistakenly think that because it’s hard to imagine, it’s not likely to happen. This is a concerning situation for many as this lack of imagination could be a potential reason for the lack of planning. We found that later in life, these groups begin to show concern and regret at not considering things like savings and pensions earlier. Realising that their retirement may not be as easy as they would have hoped. It often takes a lifestyle trigger for them to actually do something about it. This could be a friend taking out a pension, or a large inheritance. Without these lifestyle triggers, there is a missed opportunity to educate and encourage a key demographic to plan for the future. As opposed to ignoring it until it’s potentially too late.
Learning 5
Planning for future financial success or failure is often ill considered.
Final Thoughts
Our learnings have been tried and tested across many financial products. We believe they could transfer to other sectors such as healthcare. For example those with poor lifestyle choices such as excessive smoking and drinking often avoid doctors.
We are also particularly interested in the new services / products in the financial well being sector and how these are shifting. For example this year for the first time we all had free access to our credit reports. Previously these were available at significant cost from specific companies. This shift should motivate people to take more interest in their short and long term financial well being. In the past, credit reports were only viewed when considering a mortgage or in moments of financial difficulty.
We are also seeing big changes to the traditional banking sector. Challenger banks such as Monzo and Atom are seeking to take millennials away from established financial institutions. There is now an ever growing market for money monitoring products such as B, Pariti and Dobot to name just a few.
We feel there is still a way to go before someone cracks a truly intuitive and useful financial service. For now we will keep working on it.
Fancy a chat about this blog then email us hello@aplaything.com or check out our website http://aplaything.com/
