News
A new way of banking – “nudge” banking - promises to significantly facilitate customers in achieving their long-term financial goals with the help of a few gentle ‘nudges’. They are given by the Nudge app developed by the British financial institution HSBC, which has been running pilot tests in the UK for several days now.
The app has 38 types of short messages or "nudges" which users may receive on their phones, such as day of the week when they spend the most for groceries or the amounts generally spent by people of the same age and in the same income bracket. In such a way users may discover that they spend at restaurants more than their peers and that it is possible to save money if they cook more often at home; or that they spend approximately GBP 200 per month in their favorite coffee shop. The bank comments to the media that its purpose is to give kind-hearted tips, rather than coach their customers.
Nudge banking is based on the nudge theory in behavioral sciences. According to it, indirect encouragement through sharing an idea with or a giving a subtle tip to a particular person or a group of people has the same or even greater effect in promoting a certain fruitful behavior than any direct command, order or legislation. According to this theory, people would be eating more fruit if there was such in their sight, i.e. they have been nudged instead of being forbidden junk food. The theory has gained popularity through the bestselling book of Richard Thaler, Professor of Economics and Behavioral Science at the University of Chicago, and Cass Sunstein, Professor of Law at Harvard.
The pilot mobile application Nudge will follow the experience of texting HSBC customers to alert them to the fact that they are approaching their overdraft limit. Discovering this may be unpleasant, however, this type of nudging is like a car's fuel indicator light. According to HSBC official information, in this way customers have saved approximately GBP 85 million from fees for exceeding their overdraft limit and the amount for the period only between Christmas and New Year is approximately GBP 800,000.
“Using technologies to improve customer experience is helpful, however, it is important that it is not an end in itself. If we apply the theory of well intentioned "nudging", at present we count for this on our expert customer advisers. They take personal care of the customer. Simultaneously we are digitalizing many services so that customers are enabled to perform their usual financial transactions, payments, etc. as quickly as possible, whenever and wherever they like, and to follow the status of their accounts in real time - for example if their card was used for quite a large payment, the due and payable installment, information of an expiring insurance policy, etc. Besides, customers are already able to directly request a loan without visiting the bank or they may see a sample savings plan on websites such as: www.yourfinancialadvisor.bg", UniCredit Bulbank commented.
HSBC announced that it will go on with testing the Nudge application in the following three months. After that the conclusions from the pilot phase will become clear as well as how they can be used best to the benefit of customers.
How about you? Would you like to try the benefits of "nudge banking"?
The article is an original text from the blog of UniCredit Bulbank. The following sources have been used:
http://www.about.hsbc.co.uk/~/media/uk/en/news-and-media/rbwm/160119-hsbc-launches-nudge-trial.pdf
http://www.bbc.com/news/business-35351638
Regarding the blog of UniCredit Bulbank
The article is part of the series of expert financial materials in the corporate blog and the digital channels of UniCredit Bulbank – Facebook, Twitter, etc. - on the topic of "Finance for Non-Experts: Practical Ideas for Smart Money Management". “Money: starting with a clean slate as of January 2016” was the first article. In the previous year among the financial topics in the blog of the Bank were articles such as: „Why we should use bank cards instead of cash “, or „Five symbolic quotes from Star Wars which may help you get richer “ etc.
More information for media:
UniCredit Bulbank, Identity & Communications Department
Viktoria Blajeva, Phone: + 359 2 9264 993, wjlj/ebwjepwbAvojdsfejuhspvq/ch