Humans are terrible at making good decisions around health and finances. A startling fact is that 43% of people now die from preventative disease relating to bad decisions. The choices we make are literally killing us, so why do we do it? Psychology Today narrowed it down to three basics – wanting can overcome liking, not having something makes us want it more and this leads to the slippery slope of no control.
To top that off, advertising and marketing taps into all these emotional drivers which means we live in an environment designed to take from us. The temptation industry is winning with billions of dollars spent on trying to make us buy more stuff. Twenty-four-seven shopping, one-click payments, ‘free’ shipping, next day delivery, social selling, influencers and remarketing are all part of round-the-clock sales funnels.
Then there are the products that help us spend – credit cards, AfterPay and Zip Pay, PayDay Loans and eve the endless subscriptions of small increments that suddenly add up to hundreds of dollars each month. It’s no wonder people are completely unaware of their financial reality and find themselves on that slippery slope. Juggling accounts and tracking payments or subscriptions gets complicated.
How can an app help people save?
Traditional banking used to give people a tangible way to save. Cash money, cheques and bricks and mortar stores meant money in your hands and more awareness of numbers. Automated savings has generally been the best way to save for short and long-term goals but now it can be done with a little help.
Remove decision making from the equation
Small accumulated actions can have a big impact because bite-size changes to financial behaviour are acceptable for our brains when we don’t have to make any obvious sacrifices. Micro-saving and investing are about creating opportunities within existing behaviour and turning them into goal-saving realities via automation. With Navag8, we allow users to choose a round-up a percentage between one and ten on each transaction. The total round-ups are calculated weekly and withdrawn from a ‘funding account’ that is then spread evenly across the total number of active goals. We find that the closer people get to their goals, the less they want to withdraw it and often they don’t.
Visual dashboards of financial data
Humans are terrible at real-time mental calculations or choosing sacrifice over instant gratification. Budget blowouts are common and according to the recent Suncorp Savings report, the most common overspend is on groceries. This is not surprising because millions of dollars are spent designing spaces that lead to temptation and make us deviate from budgets or lists, both in-store and online. Early research has shown that aggregated financial data can help curb excessive spending and create more awareness around an entire financial situation rather than just one bank account. We have a personal journey documented here.
Digital nudging for better habits
Behavioural economist Schlomo Benartzi and Richard Thaler devised a program back in the mid-90s that was referred to as ‘digital nudging’, where e-communications nudged people to make better decisions about their financial future. Whilst their first test was nudging via email and was hugely successful, the more current versions are with a mobile app that showed all financial data on a visual dashboard. The emails alone had a massive impact, increasing savings by 15% in their test group by having practical steps to follow. Benartzi observed that if they could have this impact using just email, it could be multiplied significantly if using mobile delivery.
Optimise mobile delivery
Mobile phones are embedded in our daily lives and personal banking. The average person picks up their phone fifty-seven times a day (180 times in some cases), spending an average of three hours and fifteen minutes searching, scrolling, reading, messaging, checking notifications and shopping. More than half (55%) of Aussie consumers use their smartphones to make tap-n-go payments in-store, with that figure rising to 80% for Gen Z shoppers. We don’t need more volume of financial literacy content, we need to optimise the delivery with interventions or messages that are useful, encouraging, insightful and in real-time.
Round-up saving and micro-investing
When spending is so easy, we need to make saving so easy that it’s unconscious, which is where round-ups come in. By rounding up transactions to the nearest dollar or a chosen percentage from credit cards, debit cards or smart-phone payments, consumers can save money whilst spending. The money is usually allocated to a particular savings goal or investment account but it can also go to a super account.
Make savings hard to withdraw
Moving money from one account to the other can be done in a matter of seconds so that long-term savings account can be tapped pretty quickly when temptation hits. With Navag8, the funds can be invested like with Acorns/Raiz or kept in a separate cash account that takes a couple of days to access. When the user wants to redeem a goal before achieving it, they are asked a few times just in case it’s an impulse they might regret.
Make people feel good
There is a huge amount of stress associated with personal finance. It’s the number one cause of arguments in relationships and yet we are told that money is just about numbers when clearly it’s not. What we do know is that people don’t want to feel crappy about themselves so the data story and digital nudging need to be very carefully done to ensure progress is made. Dan Ariely has spoken of this and said that even if people have spent too much one week, the data story must be told in a way that is encouraging.
Navag8 gives employers and financial institutions a tool that helps their customers save
Financial stress affects more than half the population with 85% of people spending at least two hours per week thinking about money management or debt. Financial literacy programs have been available in a number of large employer companies for many years but always lacked the tools that help make lessons practical and memorable.
Navag8 is a white label goal-focused saving, round-up and micro-investing app that can deliver financial health tips whilst automating saving to a super fund or goal-focused bank account. It is a mobile app that automatically transfers Round-ups or Top-ups to any number of goals that the user creates. This is about adding value to your service, building relationships and engaging with customers beyond sales.
We see an opportunity for large employer groups or financial service providers to give their people the tools to save and invest, whilst building trusted relationships. Navag8 is designed to help people save money, pay off debt, achieve goals or build their superannuation.
The world of FinTech is growing rapidly and saving, budgeting or micro-investing tools are improving as insights from Big Data show how savings apps can positively change behaviour. Our team has used research and accumulated industry knowledge to address the most common problems humans have with their finances.
We would love to help you, help your customers. Get in touch.