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Technology

Nudge, Nudge: HSBC app acts like financial ‘personal trainer’

HSBC has begun trialling a new app that acts like a financial "personal trainer" in order to help users save money and be more aware of their spending habits.

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The app, called Nudge, applies a theory of the same name developed by the London School of Economics (LSE) and “nudges” customers about their spending, providing encouraging notifications designed to improve willpower and help achieve long-term financial goals.

There are 38 different types of nudges in the app, including notifications on how much money a customer spent on groceries the previous week, and updates on how much they are spending and saving compared to others in the same income bracket.

According to a YouGov survey commissioned by HSBC, more than half (54%) of 2015 New Year resolutions failed by the end of January, with nearly seven in 10 saying receiving encouragement would have helped them be more resolute.

HSBC UK’s head of digital Raman Bhatia said: “We know that many of our customers have good intentions for their financial futures, but that willpower alone is not always enough to drive a long-term change in behaviour.

“By incorporating nudge theory into our digital customer communications, we can encourage customers to adjust their behaviour to achieve their financial goals.”

The new app will be trialled by 500 HSBC customers over a three-month period, with different styles of nudges used to see which receives the best response. HSBC previously introduced a text message system that warns customers when they are reaching their overdraft limit. The bank says the service has already saved customers £85 million in overdraft charges.

Professor Paul Dolan, from LSE, said: “Just as personal trainers can be effective in helping individuals stick to their exercise goals, financial institutions can play an important role in helping their customers follow through with their good financial intentions.

“It is great to see that HSBC is using the lessons from behavioural science to change customers’ behaviour and improve their financial wellbeing.”