Published: 2nd Jul 2018

4 finance lessons from Bristol Fintech

- true team

Last month, we delivered our Breaking Inertia research to an audience of fintech experts and commentators at Bristol Fintech hosted by Clarke Wilmott.

It was a great session, accompanied by a fascinating Q&A, and these are our 4 highlights from the event.

1. Debt is as much of a danger to us as speeding

When Alfie Ruffell’s business collapsed, debt quickly spiralled out of his grasp and like so many he lacked the financial education to keep control. During this period, he was also caught speeding and placed on a speed awareness course. It was there that Alfie realised that there was no equivalent scheme for a person in his position to climb out of debt.

In the UK, 37% of 18-24s have, on average, £3000 of debt (excluding mortgages or student loans). Of those in debt, a very small number have a plan of action for reducing it.

Debt can lead to anxiety, depression, and in extreme cases, suicide. In fact, 50% of UK suicides are attributed in-part to financial stress, still a number higher than the amount of road fatalities.

As his answer to this tragedy, Alfie has developed TRAC, a financial education course for young people who have defaulted on loans. A short course on financial education would lead to a credit certificate that would prove to creditors of the lessons learned.

2. We often confuse our decision-making systems when it comes to finance

Laura Smart, a behavioural scientist at the FCA, looked at the systems we all have in place to make various decisions. “System 1”, our fast-intuitive system, is what we use for our daily decisions, for instance, brushing our teeth or driving to work. We have “System 2” in place for more complex decisions such as planning a holiday or buying a house.

From her research, Laura had found that too often we use “System 1” processes for financial decisions, ones that are far more deserving of “System 2”. As a demonstration of this point, Laura talked about an experiment in which, when asked, 77% of people claimed they had read the terms and conditions of an important financial document. However, looking at page analytics, only 7% had really done so.

3. It’s time FS looked at the impact of their products on society’s happiness

Our final speaker Natalie Horne, also a behavioural scientist, touched upon the role of behavioural science and talked up the need for new and old FS companies to think about the position of their products how their can be a benefit to society.

Natalie put the representatives of financial institutions to task, questioning whether they see customer inertia and autopilot (“System 1”) decisions, as a driver for profit. Natalie was a firm believer in the power of meditation to promote creativity in a corporate environment.

4. Mum and dad are still the number one influencer when it comes to finance

From True’s Breaking Inertia research, it emerged that lots of millennials feel hesitant about moving out of a bank account that their parents opened for them. Switching feels like a step into the unknown, with terms such as credit rating, overdraft renegotiation and standing order shift underlying their inertia. For most people, doing nothing is better than doing something.

More interestingly there’s a fear that if Mum and Dad found out about a bank switch, then they would stop paying for the various insurance, phone or utilities bills that they might still be covering.

Looking for an agency with FS thought leadership and expertise, speak to Sam.

- true team