HSBC has begun trialling HSBC Nudge, a new consumer finance app designed to help customers achieve their financial goals with the help of gentle ‘nudges’.
A recent study by the London School of Economics and Politics (LSE)*, commissioned by HSBC, utilised behavioural science to explore the barriers to people achieving financial goals. It identified that leveraging technology, such as automatic messages, was key in helping people to meet their financial ambitions. Based on the LSE research findings, the app applies nudge theory2 to encourage good spending habits.
HSBC Nudge is hosted in new cloud IT architecture and was built in just six weeks by a newly formed Scrum team1. Moving away from the traditional rigid ‘waterfall’ approach to IT development, HSBC created its first Scrum team to avoid unnecessary complexity, allowing the team to take a customer centric approach to building the app.
Using real-customer analytics to evaluate high velocity data, HSBC Nudge identifies trends in customers’ spending habits and sends regular, targeted digital ‘nudges’ to make people aware of their expenditure. These messages are designed to encourage customers to act to support their financial intentions and longer term goals.
The 38 types of curated nudges currently being trialled include notifications about the amount of money spent on groceries in a week and updates on how much customers are spending or saving versus others in the same income bracket.
The trial follows HSBC’s recent introduction of a text alert service that warns customers when they are approaching their overdraft limit. This service has already saved HSBC’s customers over £85m in overdraft charges since its introduction, with £800,000 saved between Christmas and New Year alone.
Raman Bhatia, Head of Digital at HSBC UK said: “We know that many of our customers have good intentions for their financial futures, but that willpower alone is not always enough to drive a long term change in behaviour. By incorporating nudge theory into our digital customer communications, we can encourage customers to adjust their behaviour to achieve their financial goals.
“By enabling the team to challenge the traditional product development approach through the Scrum way of working, the delivery timeline for HSBC Nudge was significantly reduced – a first for the bank. This approach to technological innovation will be adopted across our business enabling more efficient and agile development of our core banking technologies.”
Professor Paul Dolan, London School of Economics and Political Science commented: "Just as personal trainers can be effective in helping individuals stick to their exercise goals, financial institutions can play an important role in helping their customers follow through with their good financial intentions. It is great to see that HSBC is using the lessons from behavioural science to change customers’ behaviour and improve their financial wellbeing."
The HSBC Nudge app is being trialled by 500 customers over a period of three months. During this time, HSBC will test the effectiveness of different nudges and continue to develop the app including exploring the effectiveness of geo-location and trend data analysis as well as increased intuitiveness.