How financial services organisations can use a combination of behavioural economics principles and social media/mobile technologies to better engage with Gen Y and Millennial consumers.

1. Super Engaged Gen Y & X:
Influencing with social technologies,
gamification & behavioural finance
Presenter: Mark Neely
Head of Strategy
mneely@thoughtworks.com

2. Agenda
Challenges in the superannuation market
New thinking
A Segue
One view of the future

3. Superannuation Sector
CHALLENGES

4. Challenges - Industry
New Choice Architecture
• MySuper
SuperStream
• Tax File Numbers
• Electronic Funds Transfer
• Increased costs & investment returns transparency
Consolidation + commoditisation
• Fewer, larger industry funds
• Fewer company funds
• Dramatic SMSF growth

5. Challenges - Consumer
Lack of financial education
Lack of price awareness
Lack of interest (especially <35yrs)
Heightened sensitivity to market fluctuations
Failure to exercise choice
• Product complexity
• Switching frictions (paperwork, lack of comparability)
• Inertia, passivity & status quo bias

6. Results?
Low level of awareness or urgency
• Devastating impact for consumers, who risk outliving their money
Lack of coherent planning
• Fragmentation of superannuation amounts across funds
• Significant unnecessary reporting and compliance overhead
Low perceived value and differentiation
• Commoditisation
• Retention challenges (job or career change or exit to SMSF)
Outcomes:
• Marketing & retention costs 
• Customer satisfaction 
• Margins 

7. Superannuation Sector
NEW THINKING

8. Our Brief
How would we use the digital channel to overcome the types of
challenges outlined?
What new data, thinking and approaches were required?
Run it as we would a live project.

9. Our Brief

10. Guiding Principle 1 – Get ready for Gen X &Y
84%

11. Guiding Principle 1 – Get ready for Gen X &Y
Live in a tech-savvy world
• Digital Residents v. Digital Visitors
Higher orientation towards autonomy and self-sufficiency
• Lower expectations of government support
Enter superannuation system much earlier than Baby Boomers
• Challenge to get – and keep – them engaged

12. Guiding Principle 2 – Rational Economics Isn’t

13. Guiding Principle 2 – Rational Economics Isn’t
Many consumers are not rational and informed investors:
• Some have a taste for immediate gratification and will avoid
immediate disutility.
• Some are clearly unengaged (esp. <30yr olds, though age isn’t
the only factor).
• Some are discouraged by complexity, and lack confidence.
Compulsory nature of superannuation enhances passivity.
Yet we know many people experience stress about their lack of
command over their personal finances.

14. Guiding Principle 2 – Rational Economics Isn’t
Behavioural Biases:
Ambiguity aversion – We don’t mind risk but hate uncertainty.
Choice overload – Too much choice tends to make us indecisive.
Procrastination – We tend to prevaricate rather than make
difficult decisions that only have a future pay-off.

15. Guiding Principle 2 – Rational Economics Isn’t
Behavioural Biases:
Framing – The way an option or question is framed can determine
an individual’s response.
Mental accounting – We divide money into different pots and
treat them all separately.
‘Satisficing’ – We don’t try to solve problems and make
judgements in an optimal manner, but merely in a way that was
sufficient and satisfying (“good enough”).

16. Guiding Principle 2 – Rational Economics Isn’t
Lessons from Behavioural Finance:
Providing ‘people like me’ contextual data helps correct
behavioural biases by giving individuals greater clarity of focus
and presenting ‘norms’ that direct people to a particular action.
Pre-commitment strategies are effective for overriding preference
for instant gratification at the risk of negative future
consequences.
Consideration of future circumstances (CFC) is a greater
influencer of rational, long-term thinking than education.

17. Guiding Principle 3 –Super Isn’t Sexy
Australians’ attitude to money:
55% of adults believe that money is just a means to buy things
48% say that dealing with money is stressful and overwhelming
40% say that thinking about their long term financial future
makes them uncomfortable
31% say financially, they like to live for today
31% say dealing with money is boring
Source: Financial literacy – Australians understanding money (2008)

18. Superannuation Sector
A SEGUE

19. The Great Tech War

20. The Great Tech War
War between the titans of IT and Entertainment is going to ‘go
nuclear’ in 2012.
Primary battlefronts are mobile, tablets and apps.
• These titans do not recognise industry borders:
• Direct impact already felt in books, music, news, games, movies
and telephony.
• Collateral damage very likely in banking and finance.
– Payment capabilities via Amazon payments, Facebook
credits, Google Checkout/Wallet, Apple iTunes.
Weapons are hardware, media and data.
• All data intensive industries at risk.

21. Superannuation Sector
ONE VIEW OF THE FUTURE

22. Behavioural Economics in Action
Three-point plan to get consumers more engaged :
A highly visual personal wealth dashboard to simplify choices and
contextualise the future impact of today’s decisions.
A mobile app to provide ubiquitous coverage and apply peer
pressure via social media and ‘gamification’ strategies to
spending decisions.
A debit card to link personal spending to savings and investment
goals.

23. One view of the Future
PERSONAL WEALTH DASHBOARD

25. Aggregate
multiple
accounts for
holistic view

26. Set goals and
budgets to
distinguish
discretionary
expenditure

27. ‘Prosperity
IQ’ score
Dynamic
tools
for
displaying
future
scenarios
‘People like
Me’ peer
comparison
data

28. ‘Prosperity
IQ’ score
Gamefication of
saving –
encouraging
responsible
management of
finances

29. Promote via
social
networks
Social peer
pressure to
remain
committed to
financial
objectives and
create
‘competition’

30. Empathy
for future
self
How do I
get my
Sliders use
desired
future?
lifestyle
elements
not financia

31. One view of the Future
‘CAN I AFFORD IT?’ MOBILE APP

32. Behavioural Finance in Action
Sally is out shopping and sees a new pair of shoes that she quite likes. She wonders
whether she can afford it. She checks her bank balance using her mobile phone, and learns
she has more than the purchase price available in cleared funds.
But can she really afford the shoes, given her other commitments and savings goals?

33. Behavioural Finance in Action
Provides
aggregate view
of all accounts
without login

34. Behavioural Finance in Action
Check whether
it fits your
budget
Nudges to
encourage
responsible
behaviours

35. Positive
reinforcement
of responsible
choices, with
alerts sent to
social networks

36. One view of the Future
‘SAVE THE CHANGE’ DEBIT CARD

37. Behavioural Finance in Action
Richard learns that he can make personal contributions to top up his superannuation.
He signs up for a “Save the Change” debit card, which will allow him to round up the
price of any purchase he makes and contribute the balance to his super account.

38. Behavioural Finance in Action
He estimates that if he rounds up to the nearest $5 on his normal monthly
purchases, he’ll save on average $100 a month. Using the online super
calculator, he learns this amount could add an extra $100, 000 at retirement.

39. Behavioural Finance in Action
He uses the “Save the Change” card instead of his regular debit or credit
cards because he knows every purchase is helping contribute to his retirement.
He also understands he can opt out at any time, but the extra debits are small
so he doesn’t notice them.

40. Behavioural Finance in Action
He can monitor the impact of his new retirement savings strategy online, and
alter the rounding amount or redirect the savings to other financial goals.

41. Far fetched?
IN THE WILD

42. Behavioural Finance in Action

43. Behavioural Finance in Action

44. Behavioural Finance in Action

45. Behavioural Finance in Action

46. Behavioural Finance in Action

47. Superannuation Sector
IN SUMMARY

48. In Summary
Three-point plan to get Gen X & Y consumers more engaged :
Use the digital channel to provide consumers with an intuitive,
holistic dashboard to understand their financial position.
• Provide context (personal and peer group) for choices
• Generate algorithmic guidance and info-graphic depictions of
spending/savings outcomes
• Contextualise major financial decisions (such as Super) within
a wider understanding of their individual financial position
• Create opportunities for education and marketing

49. In Summary
Three-point plan to get Gen X & Y consumers more engaged :
Create a mobile and social presence to provide point-of-
expenditure guidance and improve ‘Prosperity IQ’.
• Help resist ‘instant gratification’ purchases
• Place expenditure in the context of current obligations and
desired future objectives (e.g. travel, savings).
• Create peer-support mechanism and ‘friendly rivalry’ towards
financial prosperity.
• Use gamification concepts to encourage desirable behaviour.

50. In Summary
Three-point plan to get Gen X & Y consumers more engaged :
Provide a point-of-expenditure opportunity to automatically
contribute to superannuation.
• Pre-commitment creates greater likelihood of future compliant
behaviour.
• Hidden savings in increments that most people won’t notice.
• Enormous future value thanks to compound interest.
• Ensure brand is always front-of-mind.

51. Q&A