Thanks to an increase in available data on global financial access and usage, there is more information available about how customers use financial services. But we still don’t know enough about what information customers access about products they are considering, and how this informs their financial decisions.
Existing evidence from ethnographic and behavioral research points to a few key things that we do know. For example, we know that people often do not shop around enough for financial services. We also know from mystery shopping research that when people even reference having shopped around, the disclosure of product information and even the product offered by sales staff can improve. So information does create power for customers in financial transactions, but we need to make that information accessible and actionable for them.
There is a significant challenge in getting customers to use and act on financial information. The challenge is that most customers are bad at planning ahead, and often do not seek out product information until the very moment we are making the financial decision. Yet most information available at that point in the customer’s journey is not neutral product information, but rather marketing and sales information offered by the provider. Whether it is at a bank branch or on a USSD menu, the last voice most consumers hear is the provider’s. Well-intentioned, impartial, government-provided comparative tables—usually listed on an official government website—are far removed from the transactional stage of shopping for a financial product. Perhaps as a result, they have low numbers of page views by consumers, and are likely not influencing their financial choices much.
Complicating this issue further is that the information delivered “just in time” is not standardized across providers or channels, and different layouts, language and even words used for financial terms can make it hard for consumers to compare and consider competing offers.
Finding ways to make neutral data feel like and reach consumers in a manner similar to marketing information – including the critical “just in time” element – is a difficult but worthy goal. Two important first steps that could help are:
- Maximize standardization through regulation. My experience working on consumer protection policy and recent critical meta-analysis of financial education programs makes me believe that “an ounce of regulation beats a pound of education” in most all cases for financial services. We need to develop more clear and standardized rules for how information is passed on to consumers instead of trying to turn consumers into financial experts.
- Open up space for financial service market places. Policymakers and industry associations should utilize shifts towards digital product delivery to help expand the use of common marketplaces where providers compete for customers on a shared platform that ends with an actual financial transaction. In some highly competitive environments these marketplaces may evolve naturally, while in others they may require encouragement or leadership from industry associations or regulators for providers to participate. Irrespective of how they emerge, these market places will also need clear standards for presentation of competing products in a consistent and standard manner. Use of these open-to-all marketplaces can drive down cost of products, create a single, standardized channel where product information would be presented in the same format by all providers, and reach customers at the “just in time” moment when they are making their financial decisions. It still is hard for me to believe that we don’t have a lendingtree.com equivalent in our financial inclusion space.
Improved access and timing of information delivery won’t make customer decisions perfectly rational or predictable. But there is the potential to leverage data from the extensive surveys on financial access as well as innovations in delivery channels to map out what information consumers seek and how, and then develop better ways to get this information to them when they need it the most.