Month: July 2016

Just as I was about to move away from my tentative foray in the psychology of saving I was exploring the other week, my eye was caught by a Google alert about a newspaper article that rapidly brought my blood to boiling point.

 Behold:

Now, much as we may want to blame this on the Daily Mail which is good at boiling bloods in general, this was lifted from another site called “Career Girl Weekly” and appropriately placed in the Pink “Femail” section. In today’s episode, I won’t even get into a feminist rant into how many shades of wrong that is, I’ll focus on the money part, in particular financial literacy and advice.

It’s easy to dismiss the above with a shrug and an eye roll because the press just needed a page filler and no one needs the infinite wisdom of “Spend less, save more” and if you read some of the 900 comments you’ll find everything from delightfully ironic ones pointing out the ridiculousness of the formulation to heartbreaking accounts from people who are genuinely barely managing to survive.

I will not even dissect how ludicrous this is in the context of the UK economy where just the cost of housing tends to be 60% of average income and over. Nor is it worth noting that for some segments, this is simply insulting and painful, whereas for other segments it’s superfluous and something one’s financial executor should loosely keep in mind when playing with portfolios. This “golden rule” indeed only applies to an infinitely thin layer of the working population that finds themselves in the position of having vast amounts of discretionary spending income and they are likely neither Daily Mail readers nor in dire need of patronising life hacks.

Financial Literacy and general financial Advisory is a very serious topic and in my former life with Meniga we were fortunate enough to have some of the best thought leaders in the world advise on how to present some of it in the product. We had started with advice which was, if not in the least wrapped in as dumb a formulation, still merely a piece of text even when strategically placed in the context of the PFM features, but we’ve then moved to letting excellent UI make those points for us for the most part.

Whether we like to call it PFM or “enhanced informational presentation of our finances” or anything else in between, if executed correctly, the contextual and relevant view of their “Money Moments”(TM)  is giving people the right information at the right time and aids them in the decision making as well as teaches them lessons in time.

While there are far greater experts in best ways to get financial advice across out there, let me reinforce some simple facts for any banker out there who is thinking of reintroducing an advice box with pears of wisdom such as the above in the new version of their digital bank:

1. Most people much prefer the visual representation of what they spent as pioneered by Simple, Meniga or Moven than being told anything with words – spare them;
2. If you choose to write advice anyhow – mind your tone – anything patronising (kind of like how I may come across here) – will be severely off-putting;
3. Context is everything – waste the chance to tell the customer they can get a loan while struggling at check-out and he’ll resent you for telling him so 2 days later in an email;
4. Make it fiercely relevant or it will be a nuisance – telling the customer he would be spending less on a mortgage in their area than the rent they are currently paying is great except if you choose to do it as they are checking their Free to Spend while running to catch the train;
5. Don’t let your disjointed backend systems dictate the value of the data and end up disconnected from the customer by “forgetting” details they have given you before;
6. Changing behaviour is infinitely hard but not impossible – Find ways to engage them with goals in the same fashion that the health industry does and set different expectation for different behaviour patterns;

Above all, remember that if it is to work in the interest of the consumer and establish the bank as a respected relationship partner it has to feel like an intensely personal dialogue with a friend. A tall order indeed, but I believe that if we experiment with humour, relevant personal information and use technology to empower the “when” and “why” rather than the “how” of “spend less and save more” we’ll start delivering on our help promises.

P.S. To some bankers – especially my famous Experience Supermen – the entire article I wrote here will have them roll their eyes and react with the same “no sh!t Sherlock!” indignation I had towards the initial life hack article, I know. To them I say – I seriously believe that one of the reasons why some are so far behind is that there is a serious gap between FinTech and banking in execution, between what we take as “digital DUH” and what the consumer sees. As I was pleading before, it’s time we do a collective mea culpa and accept that the overwhelming majority of bank consumers see none of the mBank wonders and the Moven magic and our disconnect between best and rest can easily mean some bank somewhere would add paragraphs of advice to their internet bank’s home page instead of offering 30 seconds loans at the point of sale together with nudges on how to manage it.

Following my call for action of a few articles ago I’ve decided to do something about it.

Since the industry won’t listen to me faster and set up new ways of studying how their customers truly feel about money I’ve decided I’ll take it upon myself to execute on “Emotional Banking”. Granted, nothing will be valuably scientific and my research utterly and despicably empirical but hey, beats nothing.

The only rule – question everything.

Spenders and Savers

For instance, why is it that in the rare cases when we define users for our journeys we accept in finance we can use the same data to build personas as in retail? Why not ignore age, gender and occupation and start by splitting people into Savers or Spenders. Isn’t that much more relevant for our purposes?

Then maybe we can see what each values. Whether it is time or money, what makes them tick, check if indeed Spenders value instant gratification and if Savers are more willing to delay it and if so why.

I spend a lot of time thinking of saving as my readers may know. I’m a Spender without a doubt but one that wants to grow up to be a Saver.

My obsession with this topic started when I helped design To Buy or Not to Buy, Meniga’s Finovate winning concept helping people make purchase or saving decisions. (You can see a demo of it here) It was aimed at creating a mechanism to transform impulse spending into impulse saving instead and it did so by injecting enough information into the decision making process (it allowed users to check if they have enough money for the purchase, to see if they had budgeted for it, etc) but also by making it emotionally engaging (one could crowdsource the decision to their friends on social media if they so chose and more importantly, they could see physical representations of their major savings goals to remind them what the value in saving instead would be).

Sadly this is the banking industry where we all get excited about things (the concept won Finovate’s Best of Show) but do very little about anything – the app is not live anywhere in the world today so we really have no way of knowing if it would have revolutionised the way we spend. If you think that is too big a claim look at the way Tinder changed the way we date.

The act of buying

Now what makes someone more likely to spend than others? What is it that makes a Spender? Is it the act of buying or the owning of the object that they are deriving more pleasure from?

The other day my nanny beamingly informed me that we can likely go through the entire summer without buying my son any new clothes. To her this was good news. To me, it sounded preposterous and sad. I would have more wanted to hear he has outgrown every item of clothing and we need to replace his whole wardrobe. It was going to be majorly expensive but hey, needs must. When she informed me of the opposite I felt loss. It made me question what it was that I would be missing on, why could I not share her enthusiasm at saving all that money. Turns out I had looked forward in my head to the trip where we spend an entire afternoon half listening to his preferences on whether or not T-shirts need to feature Transformers to be approved and half picking up things he “needs”. Dragging a half reluctant child through overcrowded stores and then handing hard earned cash was a price I was more than willing to pay for the experience of molding his taste, spending time listening to his ideas and feeling like I’m setting him up with necessary things as any good parent should.

So I propose this as a hypothesis: sometimes we buy experiences not things.

Here’s another example -and as I warned you, they are utterly anecdotal- I was speaking to some of my closest girl friends about buying behavior (yes they are FinTech geeks themselves, of course) and while one in particular deserves her own episode in this study as is a hard core Saver and extreme anti-Spender and I am still studying her before I can work out why that is, the other two heard me confess to a somewhat bizarre behavior and could relate to it!

Sometimes, I fill my basket up online and never check it out. On some sites, such as eBay or Amazon I end up having what is effectively a glorified wish list and I very rarely if ever, buy any of those products because in the cold light of day once I’ve cooled off from imagining I will take up yoga I never need the bejewelled mat I had clicked on. Why not have a list instead? Good question, something about a wish list makes it feel less actionable, like a recognised fantasy whereas I want to feel as close to buying that as I can without actually forking the money for it. A really interesting app called “Wish” goes even further –intentionally or not- in feeding my need for instant gratification and features an aggregated view of really cheap Chinese products – clothes, shoes, tech items- and I find myself loading them all into its basket idly as a past time. I never bought anything from them.

Imagine my surprise when I confessed this and my friends exclaimed “me too!”

Happy Money

The reality of it is that the only “happy money” is in savings. The satisfaction we get from spending is almost always marred with the subconscious buyer remorse we all experience to a degree or other but at the same time money enables momentary delight and the allure of paying for delight will never go away. Savings would need to be perceived of far greater value to equal it.

I’m still asking the industry to please find a way to get me addicted to savings like I was writing here last year but needless to say not much has appeared meanwhile.

In another episode I’ll look at what crowdfunding sites such as Kikstarter or Indiegogo teach us about delayed gratification and whether we can make investment exciting but for now I’d love to hear from you all – are you a Saver or a Spender and what makes you one?