CCPC research shows financial institutions how they can use behavioural insights to improve consumer saving habits and financial well-being
May 3, 2022
The Competition and Consumer Protection Commission (CCPC) has today launched findings from its successful behavioural research trial on consumer saving habits. The research was carried out in response to an identified need to encourage short-term saving habits among Irish consumers to increase financial resilience against unexpected financial shocks.
Designed and analysed by the Economic and Social Research Institute (ESRI)’s Behavioural Research Unit and facilitated by Bank of Ireland in a research trial with real consumers, the findings clearly show a positive increase in savings behaviours when behavioural insights are incorporated into savings product design and marketing materials.
The CCPC has used the findings to develop a guide for financial providers on how they can encourage short-term saving habits and improve the financial well-being of their customers.
‘First of its kind’ behavioural research in Ireland
This behavioural study represents the first trial of its kind in Ireland and one of the first in Europe. Developed as a large-scale randomised controlled trial (RCT) with real consumers, the study examined the effects of behavioural science interventions on whether consumers open a savings account and engage in precautionary saving. The results of the behavioural research demonstrated how altering savings application forms with ‘pledge tools’, interactive calculators and using infographics about financial shocks can support consumers in developing positive short-term savings habits, which is an important part of financial well-being.
Behavioural interventions boost savings account uptake by 25%
The research shows that by applying behavioural science to customer communications and the design of application forms, a financial provider can increase the uptake of savings accounts by over 25%. The ESRI’s research report also records the greatest benefit among customers on lower incomes, who are most vulnerable to the negative effects of unexpected expenses and financial shocks.
Future ‘financial shocks’ shown as key savings motivator
As part of the behavioural research trial, customers were sent marketing emails with consumer-friendly infographics that illustrated financial shock statistics, for example; “6 in 10 people face an unexpected expense each year”. Customers who received these emails were 20% more likely to open a savings account than those who received standard marketing materials. The study’s financial shock emails and digital ads saw a “click-through” rate increase of almost 10%.
Additional evidence-based findings showed:
- Majority of customers decide to use optional interactive calculators to calculate their total savings target, the date they wanted to reach their goal and how much they wanted to save each month. Customers who opened a savings account were 10% more likely to have used the calculator than those who started a savings account application form, but didn’t complete it.
- Reframing ‘rainy day fund’ messaging to ‘unexpected expenses’ in the behaviourally-informed savings account application form, positively influenced consumer behaviour when setting specific savings goals.
- Flexible commitments through ‘pledge tools’ offered customers the chance to make pre-commitments to withdraw only for specific reasons (e.g. a car breakdown). International evidence shows flexible commitments to be more appealing to customers than fixed withdrawal restrictions. Trial participants who opened a savings account were over 2.5 times more likely to have used the optional pledge tool than those who started the application, but didn’t complete it.
Full findings from the ESRI behavioural research report can be found in the working paper.
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