Goal-based savings solutions are on the rise
Over the course of the last few years, goal-based savings solutions have become increasingly popular among banks. Many have already launched their own goal-based savings solution, or are currently considering developing a solution in-house. The decision to invest in an in-house solution is mainly driven by the perceived strategic importance, combined with the seeming simplicity of the offering.
Goal-based savings can be a very effective way of driving engagement and business results – if done right. However, banks often underestimate the time, investment and complexity required to launch an effective solution. As a result, most in-house developments fail to deliver the expected results. Behind closed doors, even banks who have celebrated big PR success with the launch of their goal-based savings solution admit that it’s not been effective in driving engagement and business value.
Most common points of failure
Many banks fail to incorporate a sophisticated understanding of cognitive- and neuroscience, as well as behavioural economics, into the product to make it effective in driving customer behaviour. The most common issues are:
- Failure to engage people with their dreams
- It’s crucial to inspire people to create a dream/goal. Yet many solutions don’t even feature a basic inspiration centre for customers.
- There’s a need to connect to people’s emotions and build a bridge to the future self. Yet many solutions use simple icons that lack emotion, offer a very limited selection of images, and fail to offer the ability to upload a personal image.
- Failure to help people save money
- Saving must be effortless and engaging for customers, but many solutions offer only manual ways to allocate money towards a goal, or just offer a basic recurring saving mechanism (daily/weekly/monthly). A basic roundup feature is only offered by the more advanced solutions.
- It’s essential to nudge people continuously to help them stay on track.
- Failure to cater to individual needs and preferences
- A truly personalised experience offers a high degree of flexibility. Many solutions are too rigid and inflexible. For example, some people don’t want to specify an end date or a total amount, but they have no choice.
- It’s also important to offer a variety of ways to save money, based on different personalities and lifestyles. Some people prefer automated savings, while others like the experience to be more active and enjoyable.
What does it take to make a GBS solution work?
Understanding of human psychology
Human behaviours are complex, and changing behaviour is an even more complex task. What you need to develop is an experience that will drive behaviour, not just financial products.
Providing information alone is not an effective way to drive engagement. You need the expertise to operationalise emotional design. Most banks don’t have this expertise in-house and the most renowned scientists in this space are not available for hire. Tapping into their expertise requires a more holistic concept for collaboration.
Commitment (budget & time)
Building an effective goal-based savings solution is not a one-off project for a few months. Reaching a sufficient level of effectiveness requires a product commitment to continuous improvement over the years. At Dreams Technology, it has taken us 7+ years, during which we have collaborated and run studies with over 30 world-class external researchers. The overall R&D investment to develop a solution with this level of effectiveness amounts to over € 30 million.
Even if you manage to mobilise a significant budget and bring together a team with the right competence – and a lot of patience – there are no guarantees that it’ll work in the end. We’ve seen banks invest years of development and tens of millions into projects that have not delivered the desired results.
Our advice: only commit to an in-house development if you have the necessary budget, time and experts in place.
The impact of an effective GBS solution
If you manage to launch an effective GBS solution, the payoff in terms of business impact is well worth the effort. Get it right and you’ll see an increase in customers’ financial health and wellbeing, as well as engagement and retention, and you’ll generate intent data to drive more effective up- and cross-sell.
How to quick-fix your GBS solution
Savehacks by Dreams Technology
If you have a goal-based savings solution in place already, it might be difficult to replace it – even if it’s not delivering the expected performance. That’s why we offer our “Savehacks” functionality for banks as an add-on that you can simply plug into your existing solution.
Savehacks are unique micro-savings mechanisms that help customers find money to achieve their dreams. They’re elaborate behavioural science tools that tap into people’s rewards systems to help them bridge the intention-action gap, and they are tested and proven on millions of customers across different geographies.
Find out more about Savehacks.
Depending on your setup and preference, we can offer you two options. The full interface – white-labelled to match your look and feel, or as an API-only version for full flexibility.
No matter which option you choose, you’ll be ready to launch the feature within a few weeks.
Want to learn more? Book an intro with us!