Our Team’s Case Studies
Financial/Insurance Products & Processes
Helping Bank Customers to Manage Their Overdrafts
Following on from the Financial Conduct Authority (FCA) focus on customer overdrafts, financial institutions are assessing good customer outcomes for the pricing and usage of current account overdrafts. Behavioural economics considerations for this include salience and simplicity of charging approaches, and flexibility: customers knowing they have a safety net if needed in future can enhance financial well-being in the present. Whilst these may be over-arching goals, customer segments and individual customer circumstances also play a role in overdraft usage. If overdrafts are used, on either an authorised or unauthorised basis, the alerts and messaging around this can make the difference in customer response and action. Testing showed that some interventions worked and some did not, indicating that there is no obvious ‘quick fix’ and that careful consideration of behavioural economic principles and practise are needed to ensure customers’ needs are best met.
Enhancing Financial Investment in the Charity Sector – get report here
An online survey of over 150 charity trustees and financial officers/directors revealed a complex picture of how financial decisions are made within small and large charities. Commissioned by an asset management company to help their thought leadership activities in this sector, the survey sampled attitudes, knowledge, behaviour and decision making/governances processes. A number of robust statistical factors were uncovered which identified and helped to clarify the psychological and behavioural ‘space’ pertaining to the specific stage of the charity’s investment journey. The survey, backed-up by in-depth interviews with leading figures in the charity sector, including the Charity Commission, highlighted practical ways in which charities can make better use of their financial resources to better fulfil their objectives.
Improving Corporate Culture In The Insurance Market
A fact-finding Roundtable of leading figures in the London Insurance market, and attended by a representative of the Financial Conduct Authority (FCA), discussed how best to develop and maintain an effective culture to protect the consumer and enable more efficient markets. Although the very concept of ‘culture’ is often seen as nebulous, it can be defined in behavioural terms and measured throughout the entire organisations. It can also be enhanced by cost-effective behavioural science intervention for the benefit of the firm and their clients. A debriefing paper was produced as the outcome of this even (available upon request).
Understanding Financial Compatibilty of Romantic Partners
A survey of 1,600 UK adults looking at financial compatibility within couples on behalf of a financial services company revealed that one in three couples constantly argue about money. Typically, women complain that their men are financially disorganised, while men say they cannot trust their partner to limit their spending. Happiness in the relationship is predicted from individual attitudes towards money, but it is less of an issue for men than for women. Whilst most men are still happy in their relationship even if they disapproved of their partner’s financial habits, it is important for women’s overall satisfaction to have a positive view of their partner’s money management. These findings suggest new ways financial services can be adapted to meet the different expectations of romantic partners, and in the process perhaps save some relationships! The client of this piece of research was delighted with the media coverage it received, including many radio interviews and a Times article.
Management & Board Effectiveness
Identifying A High Performing CEO
A smallish (£80 million turnover) IT company had been founded by one man, who after 28 years decided to retire. He was aware of his many stakeholders and very eager the company would succeed. He was also eager to first look for a replacement from the board of eight executives. We met with CEO and HR director and proposed that an assessment of eight candidate be made. The assessment comprised:
1. Completion of two online personality tests (both “bright’ and “dark” sides);
2. A short 360 (multi-source) feedback assignment where they rated the director on a number of behaviours;
3. Four-hour structured interviews were held to ascertain the ability, personality, motivation and style of the candidates;
4. Completion of two short cognitive ability tests.
On the basis of this information, three of the eight were easily rejected. One was surprisingly low on cognitive ability and another very stressed by his current job. Another received very, very bad feedback from colleagues. The remaining five were rank ordered. A debriefing session with the CEO was not as long and detailed as expected – it transpired that the CEO has already made up his mind (his preferred candidates was ranked 3rd, partly because he seemed to lack energy and vision, although there were no serious “warning signs” in his profile). The other two, higher ranked, candidates seemed a better choice. The CEO’s favoured candidates was appointed, but he lasted only two years. Only then was the first ranked candidate appointed. The moral of this story is it pays to use solid psychological evidence – in this case, personality and cognitive ability, 360 feedback, and structured interviews – gut feeling as to who will be best for the job is a risky and, as in this case, a costly exercise. (Post script. A few years later the company was swallowed up in an M&A and the first ranked candidate said the assessment had such an effect on him that he decided to start his own business and he is now wealthier and healthier.)
Succesful On-boarding and Coaching of Executives
Our associate network has extensive experience of executive coaching designed to deepen leadership vision, lift and shift the quality of strategic thinking, in order to make an authentic impact on stakeholders. This is a vital element of any organisation’s success: (a) to avoid derailment, which evidence shows happens with the majority of senior management; (b) manage change in fast-paced and potentially stressful environment; and (c) become consciously agile in leadership repertoire and helping strategically to reconfigure core strengths to create new success strategies. Ways of achieving the above include one-to-one coaching and mentoring, as we all training comprising group tailored courses and modules, one-to-one in-depth, and webinars.
Improving Trustee Decision Making In The Charity Sector
We conducted a series of in-depth interview with Chairs and Trustees of major charities, which was complemented by an online survey to identify issues with governance policies and procedure and decision making processes. This research, which was an extension of the Financial Attitudes and Expectations of the Charity Sector discussed above revealed a number of significance factors that impede effective Board discussion and decision making. Not limited to the charity, this research pointed to the following initiatives to enhance Board effectiveness. Regular diagnostic checks of board-level policies, procedures and decision making, comprising: (a) annual MOT of fitness-for-purpose; (b) assessment of group dynamics to mitigate vulnerabilities; (c) strategies to future-proof board processes and decisions; and (d) pre-empting problems and getting ahead of the curve.
Identifying and Preventing Employee Financial Fraud
Based on the psychometric expertise of Behavioural Fusion, we helped a client develop an assessment tool to help identify employees who might be at high risk of dishonesty, misconduct and outright fraud. Complementing the Diamond Model of Fraud – which highlights the separate components of Incentives, Opportunities, Rationalisation, and Capacity – we put individual differences in personality centre stage, something which has been relatively neglected in the field. This assessment tool is based on up-to-date scientific knowledge from differential psychology and neuroscience, and is the most comprehensive model of person-level factors that potentiate misconduct when the opportunities arises. As this assessment tool is situated within a broader fraud prevention framework, our approach allows companies to identify weaknesses and vulnerabilities in systems that may be exploited by employees disposed to dishonesty and misconduct.
Consumer Behaviour
Signficantly Improving Retail Sales and On-line Purchases
A FTSE-100 retailer launched an in-store initiative, aimed at influencing customers to create an online account with them and to make their first online order. Interest for this initiative relied upon shop-floor staff to approach customers as they entered the store and saw a national average of 5.4% conversation. Through experimentation and using observation and sensory interviewing techniques with staff and customers, it was clear that numerous elements of how the initiative was framed (by staff) could be enhanced to become more compelling by the use of basic psychological principles such as: body language, tone of voice, persuasive language and approaching customers at different points in their store journey. From this behavioural analysis, consumer psychologists produced a 30-minute training programme designed to educate staff so they could implement a more effective sales strategy tailored to their own individual personality traits. The results showed an increase of over 50% in conversion sales.
Reducing Costs By Increasing Adoption of Financial Digital Platform
A leading UK financial institution wanted to increase the adoption of their digital platform – this was to reduce costly interactions and to provide customers with a reliable and convenient means by which to keep track of and to manage their financial products. At the start of this project only a very small percentage of customers were using the existing online service. We analysed the barriers to adoption and applying behavioural economics and science principles and findings we suggested a number of strategies to encourage both initial registration and longer-term engagement, which included: reducing ‘transaction costs’ (i.e., time/effort needed to on-board and use system); social proof (showing how people like ‘me’ use this platform); personalisation of communications; and focussing on behavioural factors such as self-consistency and adherence to self-declared goals. The outcome was a more behaviourally informed online service that customers were more likely to use to their financial benefit – as well as to the financial benefit of the institution by reducing costs.
Improving Health/Well-being By Nudging Smokers Away From Building Entrances
Commissioned by one of the colleges of the University of London, we conducted a psychological and behavioural study of the factors influencing mainly students, but some staff, smoking close to the entrances of University buildings. This behaviour created a nuisance to people using the buildings as well as a health hazard to those who are forced to inhale the smoke as it ascends the building and enters office windows. We considered psychological, social and environment factors, and measured by observation how many people were smoking next to the entrances of different building, at what time of day, year, and we also measured weather conditions – we also interviewed smokers to get their perspective. On the basis of this qualitative and quantitative study, backed up by a review of the relevant literature, we proposed a number of specific interventions for different entrances which took into account signage and designated smoking spots that afforded comfort to smokers. We also advised on an information campaign to ensure that any nudges would not be shorted-lived and would become the ‘norm’ for smoking around university buildings. As a result, interventions have significantly mitigated the problem.