Anish Acharya, partner at A16Z, recently published Fintech can save us from ourselves, a piece about how technology can help us make better savings decisions. He offers a few patterns that have been more effective than shaming techniques. All of them take the decision away from users, and automatically make the best decision.

  • Invisible savings, used by Digits, which automatically saves your money and puts it in a separate savings account
  • Prized-linked savings, in which consumers are entered to win a jackpot anytime they save a certain amount in their own accounts. This has natural network effects because the prize increases anytime a new customer joins the pool (although probability of winning decreases).

As fintech starts to “harness our biases”, as Anish says, I think there are two interesting factors to consider.

  • This is a very personal choice. Whether it’s invisible or prize linked savings, or another technique - there’s an opportunity for a product to aggregate all the options in a simple to use product, and allow consumers to switch between different savings methods based on their life stage and circumstances.
  • These products deliver reassurance to consumers that they are making the right choices with their money (in this case, by taking the choice away altogether). Another source of reassurance comes from the social cues - peers and others that one respects. If a friend is saving money in a certain way, knowing that you’re doing something similar to them can really help. This dynamic can be exploited to drive growth of an existing product (i.e. getting notified that your friend is saving X% more because of this app can be really effective). Further, if one were able to view “profiles” of other people’s saving formulas and apply them to their own accounts, that could harness that same dynamic. This ‘user generated’ profile can be used to identify saving patterns that might be different across cultures too (where mental models of how to manage money are very different).