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EverUp: The Fintech Inclusion Opportunity – Looking Beyond Design to Human Psychology

One of the core struggles incurred by modern financial technology is adoption by the masses. Despite even the most strenuous efforts, fintech still reluctantly retains an air of exclusivity. 

Giuseppe Caltabiano, Co-Founder and CEO, EverUp
Giuseppe Caltabiano, Co-Founder and CEO, EverUp

Yet there is extensive opportunity for leaders of the industry to turn the tide on financial inclusion. In this guest post for The Fintech TimesGiuseppe Caltabiano of EverUp discusses how fintech engagement amongst the public can be improved, and how prominent players of the system can better the rate of financial inclusion. 

Giuseppe is the co-founder and CEO of EverUp, UK’s first prize-linked savings app, aspiring to change the way people engage with their personal finance life. Previously Giuseppe was Head of D2C at M&G Investments, where he looked after 180,000 retail clients. Before that, he served as Group Head of Wealth, ExCo member and Chairman of the Investment Committee at the MeDirect Group, a Pan-European banking institution and wealth manager backed by AnaCap Financial Partners. Giuseppe also served in several senior management roles at other financial services firms; including Barclays, European Resolution Capital Partners, Rothschild and HSBC.

Fintech innovators have historically been driven by addressing problems that the traditional financial incumbents have been unable, or unwilling, to address themselves. This includes leveraging data to provide a personalised experience, focusing on consumer-first UX, and providing a service tailored made for consumer needs. In theory, this ought to have driven the democratisation of the financial industry, yet many people still perceive fintech products as being exclusive.

My view is that there isn’t enough consideration given to mass consumers’ needs. Trust is a critical factor for financial services – to trust a new app, you need to understand it. For people with low financial fluency, the extensive information spouted by financial products can cause a psychological response called ‘cognitive overload’. This means that the volume of information presented is so overwhelming that we become ‘paralysed’ and unable to make any kind of decision.

A lack of positive reinforcement is another significant factor behind low-engagement. Any app is chasing the holy grail of high dwell times and daily or monthly active users. Creating an app consumers constantly need or want to open is key for success. When it comes to savings apps – you need to recognise that saving money is scary for those who don’t have a handle on their personal finances. Positive reinforcement, rather than scaremongering, is critical and will maintain consumer interest and engagement above anything else.

The truth is that the majority of fintech products are designed by financially-literate people for financially-literate early adopters. Most new launches have prioritised user experience and design for early adopters over the mass user. Many fintechs have overlooked the reasons why people don’t proactively engage in managing their finances (and it isn’t app design) and thus financially excluded swathes of people.

The Savings Challenge

The UK has a problem with saving money. The Money Advice Service recommends having savings to cover at least three month’s worth of essential outgoings in case of an emergency, such as redundancy, illness, or an unexpected expense. Yet a study found that 29% of those aged 18-34 have less than one month’s essential outgoings saved.

There are lots of contributing factors, but our own research has shown the reason people don’t save is not because existing savings apps aren’t attractive – but because many people just don’t have the motivation or incentive to regularly save. The financial industry is not unique with this challenge. Healthcare is just one example of an industry that has struggled with engagement but a wave of innovation involving gamification and bite-sized campaigns – ‘five a day’ ‘couch to 5k’ or simply counting steps have transformed some of the most mundane aspects of health and turned them into repeat habits.

It is time for fintechs to adopt this mentality to people’s financial wellbeing.

The Psychology Behind Our Habits

In psychology, a habit is defined as an action that is repeated regularly, requires little to no conscious thought, and is learned rather than being an innate behaviour. A habit becomes embedded through reinforcement and repetition, meaning that when an action results in some kind of positive response it is more likely to be repeated. This is what healthtech startups have tapped into to encourage people to engage with their health every day. Badges, leader-boards, and visuals that show progress are all motivating.

Instant gratification is another feature in human psychology and this is where the real value lies for fintechs looking to build financially inclusive products. Instant gratification occurs when an action has an immediate positive result or elicits an immediate positive response in the person undertaking the action, such as a rush of endorphins.

Playing the lottery is a good example of instant gratification – there is always a chance you will win and it’s for this reason that a significant number of UK adults are regular lottery players, despite the chances of winning being negligible. This same behaviour change tactic has been embedded into recent public campaigns. For example, the governor of Ohio recently announced that everyone who received a Covid-19 vaccination would be entered into a state-wide lottery. This caused the vaccination rate to jump by 28% in a matter of days.

At EverUp, we have drawn on the psychological principles behind playing the lottery and other forms of gambling to give savers the instant gratification they need to stay motivated as they save. Early numbers suggest that the immediate positive reinforcement users get through gamified saving is having a significant impact on the number of active and repeat users.

So, What Can Fintechs Do?

I believe we are at a critical tipping point with fintech innovation. If we continue as we have done so far, the financial divide will widen. There is a real opportunity to blend the expertise and technical skills of ambitious entrepreneurs and some of the best business brains with the reams of evidence in human psychology to drive inclusion into the industry. Fintechs can be at the forefront of real social change – they need to focus on engagement and retention for the mass consumer – not the minority. The research speaks for itself and smart entrepreneurs would be wise to tap into it – those who do may just set a new standard for fintech innovation that works for the good of everyone.

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