Problem
Decisions and behaviours play a vital role in helping people to avoid and move out of poverty. A recent study has summarised the impact of poverty on the processes under-pinning decision making. A key finding that helps understand saving behaviours is people low in socio-economic status often see themselves as less likely to perceive that their actions will affect how their lives turn out. The less people feel that their actions matter, the less likely they are to make choices aligned to achieving future goals. This has consequences for saving behaviours.
There was an almost unexpected and very emotional effect from this new service … people who previously never had savings suddenly did … and it wasn’t the amount that mattered; even a small amount of money in their savings account gave them a sense of power and control over their finances.
Faith Tucker, Senior Vice President & Product Developer at Bank of America during the Keep the Change project
Solution
A design team at the organisation IDEO were asked to find novel ways to entice people to open bank accounts. The service designers:
- embedded themselves into the Bank’s team and conducted service observations in several different geographical locations.
- gathered existing research to understand more about the people and groups who were least likely to have bank accounts.
- They spoke to families and individuals, learning about spending and banking habits. They were interested in how excluded users solved their banking problems.
- They summarised the patterns and themesemerging from information they had gathered. This work took place during the early 2000s, before online banking and mobile devices had more or less replaced the idea of a balanced checkbook. They noticed many people in the lowest incomes families had a practice of rounding up the numbers in their checkbooks; this made addition easier, but it also gave a small buffer in spending.
With this insight and the knowledge many of these families had difficulty saving what money they had, the team proposed a new banking service. People could enrol in a savings account that would round up purchases made with debit cards. Then, the overage would be transferred to a savings account automatically. In addition, the bank would match the money transferred to savings to a certain dollar amount.
Impact
Since the program launched in September of 2005, more than 12.3 million customers have enrolled, saving a total of more than 2 billion dollars. Of all new customers at the bank, 60% enrol in the program. Other banks have now replicated this model.