How can financial services providers leverage Behavioural Science to benefit customers?

By Steve Jackson, HSBC

Over the last few years, HSBC UK Digital have been pushing the boundaries in testing new and innovative solutions to help customers better manage their money. Examples include the HSBC Nudge pilot that was run at the beginning of 2016, which provided pilot users with insightful and timely push notifications to help improve their financial behaviours. We also ran the HSBC SmartSave pilot in 2017 as part of the first FCA Regulatory Sandbox, which helped customers to save money as they spent, using innovative automated savings rules. Both pilots were a huge success and led to improved financial behaviours from those that took part of the trials.

One of the key insights that emanated from the SmartSave pilot was that customers who took part in the trial, and were actively using the automated savings rules, saved £188 on average over a 3 and a half month period. Most interestingly though, we found that we had changed the savings behaviour of these customers, as we could see that they were transferring more funds into their savings account outside of the app. This led to the pilot customers saving £609 more on average than those in the control group (a very similar set of customers who were not using the app) over the same period. By bringing savings to the forefront of customers’ minds, and by helping them to realise their ability to save, customers were far more likely to proactively transfer funds to their savings accounts.

The positive impact on customer behaviour that we saw as a result of these pilots led us to question how else behavioural science can be used to benefit our customers. As a result, the UK Digital Innovation team decided to host a 60 minute panel discussion on ‘Behavioural Science in Financial Services’ at the Innovate Finance Global Summit 2018. The panel brought together experts in the field to understand how HSBC UK, and other financial institutions, can leverage behavioural science and, ultimately, provide tangible benefits to customers.

The panel was hosted by Stuart Johnson, Head of Conduct and Behavioural Science at HSBC UK, and was made up of an all-star cast of Behavioural Scientists; Pedro Bordalo from the Saïd Business School at Oxford University, Joseph Sherlock from the Duke University’s Centre for Advanced Hindsight, Laura Smart from the FCA’s Behavioural Economics and Data Science Unit, and Benedict von Lucke from a FinTech called Neuroprofiler.

The topic proved to be a highly engaging one, with a packed out room, and a lot of questions throughout the discussion from those in the audience, with our panellists sharing their expert opinions and insights on their research. The panel were quizzed on the importance of using behavioural science in an ethical and transparent way, and it was made clear that collaboration with the regulator is key in ensuring the right outcomes for customers.

One of the key takeaways was that helping customers to save through the use of innovative savings tools, and then reinforcing this action with positive messaging (ie. “Great job, you’ve saved £x this month!), helps customers to identify as being good at saving, which can lead to positive spill over into other areas of their lives. It was great to hear that we’re on the right track with the savings and messaging pilots we’ve been running!

You’ll be pleased to hear that we’re now building messaging (nudge) functionality, as well as our automated savings features, into the brand new Connected Money from HSBC app, which will be available to all HSBC customers very soon. We can’t wait to get these helpful tools into the hands of customers to help them better manage their money!