Guest comment: A nudge and a wink - helping consumers engage with financial innovation

Pensions matter – in our research with the public, a better understanding of their pension and saving for retirement are often among top concerns when it comes to managing their money. However, our recent research with the Association of British Insurers (ABI) showed that 70 per cent of UK adults find pensions overly complex and complicated to understand, while half find pensions difficult to access.

It’s a historic challenge for the pensions industry and for the government and finance sector. Yet, this is in the context of an online retail banking sector that has turbocharged digital offerings in recent years, enhancing engagement with some types of financial products. Almost three quarters of UK adults use online banking and the FCA’s Financial Lives survey showed that 72 per cent of adults aged 65-74 and 54 per cent of adults aged 75+ banked online in February 2020, compared with 60 per cent and 27 per cent in 2017.

So, what does this mean for pensions and retirement planning? Pensions dashboards (an interface which brings an individuals’ pensions together into one place) are being positioned as a potential solution to this challenge, with dashboards aiming to provide greater control, confidence and understanding of their pensions to the public. And given the appetite for digital banking it is perhaps no surprise that in our ABI recent research more than half of the public say they would be likely to use pensions dashboards.

Pensions dashboards as a concept is appealing to many consumers, but our research also showed that further engaging consumers once they’re using the dashboards could be the real challenge. The fact is most consumers have difficulty articulating which features they will engage with until you help them imagine it fully. In the initial qualitative phase of our research on pensions dashboards, consumers told us that interactive design features which enabled modelling of income in retirement and how this changed when adjusting for factors like income, age and contributions would be important in attracting them to signing up.

However, when it came to quantitative concept testing with over 4,000 people, we found consumers were as likely to state they would use a basic view-only dashboard as they were a highly developed dashboard. This is good news for the concept but shows the importance of nudging people to do more if they are really going to gain the benefits of pensions dashboards in helping them to plan for the future – be that via greater engagement with their own data on the dashboards or taking this information to a professional to support them with their retirement planning.

People can often only imagine incremental changes to their behaviour. Therefore, it lies with designers (and the brands involved in NPD) to consider the entire user journey, and ideal outcomes and actions, and how to nudge users into ‘imagining’ the more developed uses they can put new technology towards reaching their goals. Many consumers currently imagine that simply logging-on and viewing their pension amounts would be their end-usage of dashboards.

Once using a new digital tool consumers can often fall into specific habits and routines. Testing digital banking apps, customers have often told me they would like to have a specific feature in their own app - only to be surprised when asked to open their existing banking app on their phone and find this feature does already exist. They just haven’t been exploring what is possible and didn’t know it was there. Engaging users to make an initial sign up is just one part of the puzzle – it is what comes next that could really make a difference in terms of user experience and value-add.

People say they want to understand and engage with their pensions more – pensions dashboards give them the opportunity to do so and could help narrow this existing say-do gap. However, when it comes to managing their finances there may also be a ‘need-do’ gap. People don’t always know what they need to do next to really make a difference to their financial management and planning beyond just ‘looking’. The design, marketing and functionality of pensions dashboards will be vital in helping users optimise the opportunities now offered by the accelerating digitalisation of their finances – an acceleration that increasingly includes pensions.

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