Similar to Newton’s first law of motion, behavioral economics indicates that consumers tend to default to inactivity. Not because they’re unmotivated for change, but because the other demands of life are often more pressing.
People looking to reduce their spending know that cutting grocery costs or reducing monthly subscriptions could be a huge help. But at the end of the day, most people's best decision making energy is exhausted with the challenges of work or parenting. They know it’s wise to plan meals around sale items or regularly review their budget, but after a long day, their choice reserves are simply too depleted.
In fact, the average adult makes approximately 35,000 decisions each day. And if your looming decisions aren’t causing you to lose sleep, you’re still facing 1,800 to 2,000 choices each waking hour. Those numbers can feel overwhelming, so the human brain has developed a number of coping techniques:
And similar to any activity that places a high demand on one’s abilities, prolonged decision making can result in lower quality decisions or reduced self-control in one’s choices.
As the financial experts, your customers rely on you for good advice. You understand the high cost of doing nothing. Delaying college or retirement fund contributions can be a costly mistake. Likewise, only making minimum payments on high interest debt can have disastrous consequences. Today, people expect their FI to work in their best interest, and Calls to Action can do just that.
Calls to Action utilize the nudge principle to gently encourage people to take action. You’ve probably heard about Calls to Action from your marketing team. They’ve been employed to increase clicks or bolster sales, but here’s the twist…what if banks consistently encouraged members to work in their best interest. What could happen if users received regular suggestions to trim bills, cut costs, and increase savings? Consider the impact on customer trust for the bank that helps them improve their financial situation without selling a product.
The benefit of the Call to Action is that it can meet consumers wherever they are. DiClemente and Prochaska break down the process of behavioral change into 6 stages.
Individuals in Pre-contemplation may not even be aware that change is possible. So a Call to Action can illuminate new possibilities and ignite the Question-Behavior Effect spurring curiosity about a new alternative. For those in the Contemplation and Preparation stages, a Call to Action can provide additional clarification or resources that make the change seem more accessible.
For customers actively changing their behavior and those maintaining the changes, the Call to Action is a regular reminder to stay focused on their goals. And for those who have relapsed into unintentional spending, the Call to Action is a reminder that a small step can get them back on track.
Humans aren’t hardwired to change quickly. And given the high consumer debt and lack of emergency savings, the changes necessary for some households may seem too daunting. But Calls to Action can present a small opportunity to make a simple and specific change. Likewise, they provide a clear next step, removing the ambiguity and reducing the number of options.
Plus, the experts in behavioral change continue to place a high value on small changes. These microchanges can make the initial action seem more manageable and create momentum to continue in the change process.
FinGoal offers the opportunity to build Calls to Action directly into your digital banking platform. Using transaction data, relevant and simple insights provide ways to begin saving in the user’s day to day spending. And each suggestion is designed to offer savings without sacrificing quality.
But these insights are just the beginning to build momentum. Imagine the impact you could have on your users' financial health long-term. What could they do with an extra $50 to $100 each month? After all, according to Gallup, “when banks take time to address customers' financial well-being, they strongly increase customers' confidence.”
To see Part 1 of our Behavioral Economic series, click here.
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