People save more if they are warned about financial setbacks
People are more inclined to put money in savings accounts if they are included with marketing emails warning about the likes of financial shocks.
Behavioral research testing in this country has found that messages about financial shocks can help consumers develop positive short-term savings habits.
The research was conducted by the Competition and Consumer Protection Commission (CCPC) and the Economic and Social Research Institute (ESRI) on behalf of the Bank of Ireland.
As part of the test, marketing emails were sent to customers with consumer-friendly infographics that illustrated financial shock statistics.
One of the messages states that every year six out of 10 people face unforeseen expenses.
Customers who received these emails were 20 percent more likely to open a savings account than those who received standard marketing materials.
The study found a nearly 10 percent increase in the “click-through” rate in email and digital ads with financial shocks.
The CCPC said the tools identified in the research could be used by banks and credit unions to engage more people in precautionary savings, so that they can deal with rising prices.
Research shows that by applying behavioral science to the design of customer communications and application forms, a financial provider can increase savings accounts by more than 25 percent.
ESRI’s research report also recorded the greatest gains among low-income customers, who are most vulnerable to unforeseen expenses and the negative effects of financial shocks.
CCPC President Jeremy Godfrey: “This groundbreaking research by ESRI, Bank of Ireland and CCPC has shown that if financial institutions use behavioral insights to design their marketing materials and their application process, many more Customers will choose to save for the unexpected.”
He encouraged other financial institutions to use this research to help more Irish consumers face the financial shock without becoming indebted.
Meanwhile, four out of 10 consumers managed to save more money during the pandemic than they did before the virus hit.
Those aged 25 to 34 were most likely to increase their savings.
According to a survey conducted for Aviva Life & Pensions Ireland, most people said that the lack of spending opportunities was the main reason they were able to earn more money.
People who saved less during the pandemic said the main reason was the reduction in household income.
The survey found that a higher number of women (43 per cent) than men (36 per cent) have increased their savings over the past two years.
The research was conducted by iReach Insights of 1,000 adults nationwide in March.
Half of people aged 25 to 34 have changed their savings habits in the past two years, compared to the national average of 40 percent.
Uncertainty about the future was a catalyst for nearly four out of 10 people to save more.
A large number of people said that the pandemic gave them more time to organize their financial affairs and this was true for younger age groups.
Meanwhile, more than a third of people have found or would find it difficult to open up about their financial problems, with more men than women struggling with it.
Family members are the first port of call for most people when it comes to discussing money, according to a survey conducted by leading security provider Royal London Ireland and conducted by iReach.
Karen Gallagher, interim head of proposals at Royal London Ireland, said when it comes to money-related tensions, it is important to turn somewhere or turn to someone.
