The #Psychology of #Savings and Personal #Finance with Qapital
Posted on April 13th, 2015
04/13/2015 @TurnToTech, 184 Fifth Ave, 4th floor, NY
Jane Ruffino – head of marketing @Qapital – talked about an app to help “millennial” savers save money and attain their goals. Qapital was started in 2012 and launched a product in Sweden in 2013. In March they launched an Apple app for the U.S. market with an Android app later this year. The app is paired with a debit card to one of 5 banks. The goal is to provide encouragement to save for one’s goals using automatic triggers and feedback on attaining goals such as money for a vacation or a major purchase.
Jane emphasized findings from focus groups targeting two audiences.
Age 18-24 – many see cash flow as savings
Age 25-40 – many see cash flow as reserves, but also are saving for bigger-ticket items.
In both audiences, the focus groups said
- money is boring, but pursuit of goals is important
- they want more from their money – but there is no education on how to invest their savings
- they don’t identify as ‘money people’ even if they are good savers
- they have anxiety about debt, stability and security
- shame defines their relationship to money – about having no money or not knowing what to do with it. This also appears when they consider if they deserve the vacation they want to take?
Given these findings, she recommends that the following be considered when designing the app:
- Make money less boring – create a sense of purpose: what do you want this year? Take care of needs and wants
- Let them be in charge – the reinforcement must match their interests and goals
- Give them credit – people know more about finance than they give themselves credit for – (money management associated with their mother)
- Validate their actions – e.g. gamify – save together to cheer each other on.
- Help them celebrate every win.
Making the goal concrete is essential to both give focus and create a tangible reward. Short- and intermediate-term goals are the emphasis. Creating the rules for saving should be part of the entertainment / reward for saving.
One challenge will be to keep users interested in the app to avoid the rapid drop-off in usage experienced by some fitness and dieting apps (see notes: Brian Cugelman from the previous meeting of ActionDesignNYC).
Further research on millennial’s money-views might be illuminating as we move from a zero interest rate environment (savings are a safe way to store money) to a higher interest rate environment (one can earn interest that will compound over time).
Jane’s emphasis was on savings behavior, but this might be the gateway to education on investing. I would not be surprised to see a relationship between savings behavior/rewards and risk tolerance/aversion as an investor(for a technical discussion of risk aversion download the paper on my research blog post).
The #psychology of #feedback: inspiration for ass-kicking #wearables
Posted on March 31st, 2015
03/30/2015 @TurnToTech, 184 5th Ave, NY
Brian Cugelman @Alertspark.com and @imcba.com spoke about ways to optimize feedback to maximize #behavior change. He sees a world eventually populated by inexpensive, ubiquitous #sensors that will gather data than can be used to mould behavior. One of the main challenges is to integrate
- Concentrate on sensor-base data capture.
- Data science –
- Interventions –
Currently, the most visible applications are health and fitness apps which monitor our behavior and give us feedback. The most successful apps apply evidence-based behavioral change programs which incorporate best health recommendations, monitoring behavior and give feedback on performance. Programs intend to educate and motivate using persuasive arguments to create healthy habits.
However, user falloff is steep and few follow the regimen for 3 months to create the target habits.
Brian described several areas of research that are relevant to better understand behavior to improve habit formation. These areas include
- Evidence-based design which shows that influence is maximized when there are neither too few arguments nor too many arguments presented to the audience
- Control theory argues that the loop of performance – monitoring – feedback can improve performance, but faces frictions along the way that can break the loop
- Persuasive design argues for two approaches to get a commitment
- Foot in the door – can you sign this petition, can you donate $100 – start small and go up
- Door in the face – would you donate $100, okay how about $10 – make a large request and then jump down – also used in ecommerce if someone abandons a shopping card (send a follow up email offering a discount)
- Tech that does not remind us to continue will fail. The more social interaction the better, even if the social interaction is just with a reminder program.
- The message is more persuasive the more we know about the person: this allows us to customize the message to make it more relevant to the user and better satisfy their needs and goals. Levels of interaction include
- Generic – we know little – can only give generic information (no feedback)
- Targeted – if know someone is part of a group – traditional segment analysis in advertising
- Personalized – superficial info (e.g. picture, name) – however, we should keep the message simple or it can become too complicated to understand. (and some combinations can hazardous to the user’s health)
- Tailored – know needs and desires.
Amazon uses a mix of these messages on its web page
- Targeting – message for android apps since they know he owns an Android phone
- Personalize – know his name
- Tailoring – know about specific interests
Brian then talked about novel ways to think of reinforcement and punishment.
He mentioned how Stickk motivates you by publically committing your to a goal and allows you and your friends to place money on the outcome.
He talked about how the punishment when a goal is not met should be carefully considered and is best designed to avoid undermining motivation, destroying confidence or pushing the user away from the technology that is designed to reinforce.
Brian also mentioned some references to better understand persuasion and feedback:
- Chaldini: Influence : the psychology of persuasion
- Stages of behavioral change
- BJ Fogg Persuasion design
- Clifford Nass Human-computer interactions
- Journal of Medical Internet Research