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FSPR.ED.02_Shirin Oreizy_converted-2.vtt

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{{00:00:05}}
Hello, and thank you for joining us.

{{00:00:06}}
My name is Julie Muhn, Senior
Research Analyst with Finovate.

{{00:00:10}}
I am joined today by Shirin
Oreizy, CEO of Next Step.

{{00:00:14}}
Thank you so much for joining us today.

{{00:00:15}}
Absolutely.

{{00:00:16}}
Excited to be here.

{{00:00:17}}
Yeah.

{{00:00:17}}
So I want to dig in today about what
you talked on stage during the general

{{00:00:21}}
session about behavioral sciences
and how that impacts marketing.

{{00:00:25}}
And my first question, can you give
us an overview of how people make

{{00:00:28}}
decisions, especially when it comes to
their big  life, financial decisions

{{00:00:33}}
like taking on a mortgage or their
first making their first investment.

{{00:00:37}}
Absolutely.

{{00:00:37}}
Yeah So I think the short answer is
that people are simply not as rational

{{00:00:42}}
as we like to think they are We have
our emotions, social factor, how

{{00:00:47}}
environments are designed only for us...

{{00:00:48}}
all these influence how we make decisions.

{{00:00:51}}
And like I said on stage, we lovingly
like to think of our users a little

{{00:00:55}}
bit more like Homer Simpson than Spock.

{{00:00:58}}
And so in the context of your question
around big life decisions, we actually

{{00:01:02}}
worked with a real estate startup.

{{00:01:05}}
and they had a really interesting product
solution, which was that they were trying

{{00:01:08}}
to displace the traditional realtor model.

{{00:01:11}}
So instead of traditional realtors that
charge you 3%, They charge only 1%.

{{00:01:16}}
So a 2 percent difference
is pretty significant.

{{00:01:20}}
And they were going around
marketing this as, We, in the Bay

{{00:01:24}}
Area, where the homes are about
a million dollars, I know, crazy.

{{00:01:27}}
We save you about 20, 000.

{{00:01:30}}
So if you think from a rational
perspective, Everybody should be

{{00:01:33}}
flocking to, this because it's 20, 000.

{{00:01:37}}
But from a behavioral science perspective,
what we recognize that humans are not

{{00:01:41}}
running around making 20, 000 decisions.

{{00:01:44}}
When are you running around making
20, 000 decisions day in, day out?

{{00:01:48}}
So what we did in this case is instead
of framing their solution in their

{{00:01:52}}
marketing campaigns as we save you 20,
000, we use what's called a hedonic

{{00:01:58}}
reframe and we brought the benefit
to now and said, Hey, you save so

{{00:02:02}}
much money with us that you can use
the money to go remodel your kitchen.

{{00:02:06}}
Pay off your mortgage.

{{00:02:07}}
And we saw a massive
adoption happen that way.

{{00:02:10}}
So the key insight here is that you want
to really understand the psychology of

{{00:02:15}}
how people make decisions around your
products, and especially if they're

{{00:02:19}}
big financial decisions like buying a
home, taking on a mortgage, et cetera.

{{00:02:24}}
Yeah, that's interesting.

{{00:02:25}}
So it sounds like you took it home for
the made it more real of here's what

{{00:02:28}}
you can do, actually do with that money
instead of using those financial figures.

{{00:02:32}}
Exactly.

{{00:02:33}}


{{00:02:34}}
Great.

{{00:02:35}}
So for the next question here, how could
banks and financial institutions use

{{00:02:39}}
this knowledge to improve their customer
experience and also their strategies?

{{00:02:43}}
Absolutely.

{{00:02:44}}
So going back to our Spock versus
Homer example here, I think banks

{{00:02:48}}
should really think about how
can we delight Homer Simpson.

{{00:02:52}}
And in order to delight Homer Simpson,
one of the first things that we want

{{00:02:56}}
to do is really figure out how do
we grease the way and make it super

{{00:02:59}}
easy for Homer to do what's really
in his financial best interest.

{{00:03:03}}
And how do we leverage his psychology
because there's over 300 research

{{00:03:08}}
backed ideas around how we really make
decisions as humans that we can leverage

{{00:03:12}}
to get him to do the right thing.

{{00:03:14}}
So some examples of this that have
been done really well is, for example,

{{00:03:18}}
the Wealthfront Behavioral Science
team, when stocks go down, people

{{00:03:22}}
have a tendency to dump their stocks.

{{00:03:24}}
They don't want that, and so they
change the font color on their

{{00:03:28}}
dashboard to gray instead of red.

{{00:03:31}}
Wow.

{{00:03:32}}
So that you prevent people
from dumping their stocks.

{{00:03:35}}
Or we worked with a client, Ellevest,
that helps, you're familiar with them.

{{00:03:39}}
they help women with their
financial well being.

{{00:03:42}}
We leveraged a psychology principle
called the Windfall Effect, which is

{{00:03:46}}
this idea that, we think of money in
different ways based on how it's sourced.

{{00:03:52}}
For example, in this situation,
the money that we get from our tax

{{00:03:55}}
returns, we treat it differently.

{{00:03:58}}
And we leveraged this and had women
pre commit to using what they were

{{00:04:04}}
going to get back from their, paying
their taxes, like their refunds

{{00:04:08}}
towards their retirement plans.

{{00:04:10}}
Ah, very smart.

{{00:04:12}}
Good.

{{00:04:12}}
Yeah.

{{00:04:12}}
So by changing the way people
think around or associate that

{{00:04:15}}
money with how they assign it.

{{00:04:17}}
Exactly.

{{00:04:18}}


{{00:04:18}}
Great.

{{00:04:19}}
And can you give us some examples of what
financial institutions are already doing,

{{00:04:25}}
with behavioral sciences and doing well?

{{00:04:27}}
Absolutely.

{{00:04:28}}
So I think, thanks to COVID,
we've seen a great, transformation

{{00:04:32}}
happening towards digital.

{{00:04:34}}
And for Homer, this is great.

{{00:04:36}}
The easier access to making
a better financial decisions

{{00:04:40}}
is absolutely paramount.

{{00:04:42}}
and I think the, other thing that we
see, companies doing really well, like

{{00:04:46}}
for example, Capital One is really,
good at embracing, human motivation.

{{00:04:52}}
For example, their credit wise solution
uses gamification to get people to

{{00:04:57}}
improve their credit scores, or they
have solutions in their checking

{{00:05:00}}
and savings account where they
help you like auto save from your

{{00:05:04}}
checking to your savings account.

{{00:05:06}}
So they're really figuring out how
to leverage the psychology better.

{{00:05:11}}
they're also doing a really great
job at, better communication

{{00:05:15}}
and transparency around their
solutions and clear communication.

{{00:05:20}}
Because again, if you're dealing with
Homer, you don't want to be doing

{{00:05:24}}
long terms and conditions and like
very cognitively loaded language

{{00:05:29}}
and how you communicate with him.

{{00:05:31}}
Yeah, I know a lot of the neobanks
have tried that strategy as

{{00:05:34}}
well, just trying to keep it the
basic principles communicated.

{{00:05:38}}
Great.

{{00:05:39}}
I think we have time for
one last question here.

{{00:05:41}}
What would you like to see financial
institutions do more of to better

{{00:05:44}}
understand their customers and
to give them what they need?

{{00:05:48}}
Yeah, absolutely.

{{00:05:49}}
And I'm going to focus this a little
bit from a marketing perspective,

{{00:05:52}}
because that's our area of expertise.

{{00:05:54}}
So I think one thing that I would love
to see, financial institutions do is

{{00:05:59}}
move away from just thinking about
their users in a traditional demographic

{{00:06:04}}
sense, or doing like focus groups, which
we know from a behavioral science lens

{{00:06:07}}
are problematic and instead leveraging
all the great data that they have

{{00:06:12}}
and research insights to do things
like behavioral segmentation around

{{00:06:16}}
the jobs that they're trying to do.

{{00:06:18}}
Like we see in the tech
sector, for example, Netflix

{{00:06:20}}
is really good, at doing that.

{{00:06:22}}
Another thing that we'd love to see is
that we move away from just making gut

{{00:06:27}}
decisions at the board level, and actually
embracing a culture of experimentation.

{{00:06:34}}
because as we know, if there's
anything we know around humans

{{00:06:36}}
is that we're a fickle bunch.

{{00:06:38}}
And so the best way to understand how to
motivate us is to simply run experiments

{{00:06:43}}
and test different things and really
understand what works best in real life.

{{00:06:48}}
Yeah.

{{00:06:49}}


{{00:06:49}}
I love that.

{{00:06:49}}
And as we know, even post COVID, I feel
consumer expectations are changing.

{{00:06:54}}
Their habits are changing so rapidly.

{{00:06:56}}
And yeah, bringing that into
the picture is really important.

{{00:06:59}}
Great.

{{00:06:59}}
Shirin, thank you so much for your time.

{{00:07:01}}
This has been Shirin
Oreizy, CEO of Next Step.

{{00:07:04}}
Thank you.

My name is Julie Muhn, Senior
Research Analyst with Finovate.

I am joined today by Shirin
Oreizy, CEO of Next Step.

So I want to dig in today about what
you talked on stage during the general

session about behavioral sciences
and how that impacts marketing.

And my first question, can you give
us an overview of how people make

decisions, especially when it comes to
their big  life, financial decisions

like taking on a mortgage or their
first making their first investment.

Yeah So I think the short answer is
that people are simply not as rational

as we like to think they are We have
our emotions, social factor, how

all these influence how we make decisions.

And like I said on stage, we lovingly
like to think of our users a little

And so in the context of your question
around big life decisions, we actually

and they had a really interesting product
solution, which was that they were trying

to displace the traditional realtor model.

So instead of traditional realtors that
charge you 3%, They charge only 1%.

So a 2 percent difference
is pretty significant.

And they were going around
marketing this as, We, in the Bay

Area, where the homes are about
a million dollars, I know, crazy.

So if you think from a rational
perspective, Everybody should be

But from a behavioral science perspective,
what we recognize that humans are not

When are you running around making
20, 000 decisions day in, day out?

So what we did in this case is instead
of framing their solution in their

marketing campaigns as we save you 20,
000, we use what's called a hedonic

reframe and we brought the benefit
to now and said, Hey, you save so

much money with us that you can use
the money to go remodel your kitchen.

And we saw a massive
adoption happen that way.

So the key insight here is that you want
to really understand the psychology of

how people make decisions around your
products, and especially if they're

big financial decisions like buying a
home, taking on a mortgage, et cetera.

So it sounds like you took it home for
the made it more real of here's what

you can do, actually do with that money
instead of using those financial figures.

So for the next question here, how could
banks and financial institutions use

this knowledge to improve their customer
experience and also their strategies?

So going back to our Spock versus
Homer example here, I think banks

should really think about how
can we delight Homer Simpson.

And in order to delight Homer Simpson,
one of the first things that we want

to do is really figure out how do
we grease the way and make it super

easy for Homer to do what's really
in his financial best interest.

And how do we leverage his psychology
because there's over 300 research

backed ideas around how we really make
decisions as humans that we can leverage

So some examples of this that have
been done really well is, for example,

the Wealthfront Behavioral Science
team, when stocks go down, people

They don't want that, and so they
change the font color on their

So that you prevent people
from dumping their stocks.

Or we worked with a client, Ellevest,
that helps, you're familiar with them.

they help women with their
financial well being.

We leveraged a psychology principle
called the Windfall Effect, which is

this idea that, we think of money in
different ways based on how it's sourced.

For example, in this situation,
the money that we get from our tax

And we leveraged this and had women
pre commit to using what they were

going to get back from their, paying
their taxes, like their refunds

So by changing the way people
think around or associate that

And can you give us some examples of what
financial institutions are already doing,

So I think, thanks to COVID,
we've seen a great, transformation

The easier access to making
a better financial decisions

and I think the, other thing that we
see, companies doing really well, like

for example, Capital One is really,
good at embracing, human motivation.

For example, their credit wise solution
uses gamification to get people to

improve their credit scores, or they
have solutions in their checking

and savings account where they
help you like auto save from your

So they're really figuring out how
to leverage the psychology better.

they're also doing a really great
job at, better communication

and transparency around their
solutions and clear communication.

Shirin Oreizy, Founder & CEO of Next Step, talks about the impact of behavioral sciences in decision-making in the financial sector with examples of what worked well in the past.