Behavioral Economics

You’re Using Behavioral Economics – And You Don’t Know It.

Recently we had an interaction with a credit union executive who was bothered by the notion of using behavioral economics to nudge members to save more.  The thought was this technique was big brotherish and manipulative. They wanted members to make their own decisions, free from any influences.

What this leader failed to understand is every interaction with members, the way products are priced and structured, operational processes, and of course, his marketing messages are regularly influencing member behaviors and, I hate to say, often in directions that may not be in the member’s best interest.

Want some examples?  Most credit unions would agree most of their members would be much better off if they saved more, spent less and had less debt. However:

  • The initial messages on many credit union websites are about rates and terms of mortgage loans, car loans, and credit cards. Some digging down is required to find information about savings. 
  • Branches are filled with posters, banners, hand-backs, and marketing promotions about the latest loan offerings and credit cards, and if savings are mentioned at all they appear smaller and less prominent.
  • It is often easier to cash a check at a teller station than it is to deposit some or all of it into a savings account.

Intended or not, these are nudges that have the effect of not encouraging your members to save.

Learn the truth about behavioral economics and the supposedly irrelevant factors that influence the way your members analyze choices and make decisions. Really understand how your organization can connect with your members and get the tools you need to shift those influences to help members become better financial consumers.

Ready to Get Some Dirt on Those Hands?

Find out more about the Understanding Behavioral Economics: the truth about decision making workshop

1 Comment

  1. Joe Winn on January 3, 2018 at 3:21 pm

    I agree. The prevailing message becomes the prevailing message.

    Credit unions talk about helping their members save more, yet they make money by lending to them. By encouraging them to carry debt. By facilitating over drafts. All savings does for the credit union is ensure their loan to deposit ratio is good, and allow them to continue lending.

    Saving more is necessary, and credit unions do want to encourage it, just without compromising their money-making services. Putting away enough through the year to avoid needing a holiday unsecured loan is good financial practice, but it costs the CU money in lost potential.

    We need to focus on products which encourage responsible saving and spending while building member engagement, retention, and providing ongoing sustainable income for the credit union.

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