Independent Banker - August 2024 - 39

Jake Fuchs, investor at BankTech
Ventures, a strategic investment
fund, points out that fi ntech tools like
Acorns gamify savings to incentivize
behavioral changes. " It's providing
the right levers to help people want
to save, " he says. " A key point is that
we all tend to have a present bias.
Essentially, we're biased to [expect]
instant rewards. "
Fuchs adds that encouraging
customers to save more also helps
community banks that are eager
for more deposits. " If banks can
fi nd a way to shift that behavior
and incentivize behavior toward
delayed [gratifi cation], there's a huge
opportunity for savings and deposit
growth, " he says.
Sarah Welch, managing director
of personalization for Curinos, a
technology and analytics company,
emphasizes how emotionally charged
fi nancial decision-making can become.
" Your fi nances are at the heart of
security and your ability to live well, "
she says. " Its importance is very,
very high. It is emotionally fraught.
We have all grown up with diff erent
meanings around fi nance. For some it's
straightforward; for some, it's a sport.
For some, it's something they don't
want to think about. "
Uncovering answers in data-
and beyond
Bankers' eff orts to understand
what drives customers' decisionmaking
can benefi t from AI-driven
technology, which has tremendous
power to spot patterns and
personalize off ers. But bankers and
industry observers agree that the real
AI magic occurs when banks combine
technology with the personal touch.
" Data provides rich contextual
information about where a customer
is, but it's not exhaustive, " Welch says.
" You're not going to fi nd out what
emotional context a person brings to
The psychology that drives
customer behavior
Research into behavioral economics has generated
numerous insights into how people make decisions.
Here is a sampling of some concepts:
f Anchoring eff ect: The first number we encounter, such
as the price of an item, will tend to be the reference
point for all of our subsequent perceptions of whether
prices are too high, represent good value or signal a
" cheap " item.
f Bounded rationality: Limits on time, information and
mental capacity skew decision-making and incline
people to shortcuts and " good enough " decisions.
f Endowment eff ect: We tend to overvalue what
we already own. If we're given a coff ee cup, we'll
turn around and attempt to sell it for more than we
ourselves would pay to buy it.
f Loss aversion: Psychologically, losing a $10 bill aff ects
us more negatively than finding a $10 bill rewards us.
To equal the emotional impact of the $10 loss, we'd
have to find a $20 bill.
f Framing: How choices are presented to us aff ect how
we choose, even if the alternatives are the same. An
example is 20% fat yogurt versus 80% fat-free yogurt.
money or what goals they care about. "
Kent Landvatter, CEO of
$610 million-asset FinWise Bancorp
in Murray, Utah, agrees that data's
utility is to provide the groundwork
for a personal understanding of
customers. " I'm [data-driven], but
knowing the customer isn't just the
BSA aspect, " he says. " What they
need, when they need it and what they
don't need and advising them is what's
really important. "
Union Savings Bank (USB) in
Danbury, Conn., off ers Spending
Insights, an AI-based program that
analyzes users' normal spending
patterns over a period of six months.
The real payoff , according to Rick
Judd, EVP, innovations and revenue,
at the $3 billion-asset community
bank, is that it helps bankers relate
more eff ectively with customers.
" We have the face-to-face
relationships in branches, and
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Independent Banker - August 2024

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