How important is emotions when someone is making a decision? I’m specifically thinking about a young millennial or Gen Z who is thinking about how they make banking / payment decisions. This question came to mind as I was perusing an article from The Financial Brand that touched on the trending use of Behavioral Analytics to target new customers. You can read the whole article Here. The article outlines the nature of how emotion plays into decisions on new account opening and the effective use of data related to prospect behaviors. As I have been recently opining on how FIs can effectively use the rich data that they have, I found this article especially interesting. An especially compelling point is that while we often make decisions using our heart (emotion), financial decisions are more likely to be sound if we use our head. Yet when people are confused or lack the information needed to make a well thought out decision, they reach out to family and friends or even social media to find out what everyone else like them are doing. This often leads to emotional decisions about banking and payments that may not always be in their best interest. This can be seen in how young people bank today. Some young people bank where their parents banked. They may have been the recipients of accounts opened before they were even teenagers. But many young people today are involved in alternative payment services like Venmo. And it’s likely that they didn’t learn about Venmo from their parents, they found out about it from social media or their friends. And the fact that Venmo enables features such as emojis associated with payments even solidifies the nature of emotions in the transaction / banking dynamic. So, what should your institution be doing to accept this emotional aspect of making decisions and capitalize on it? Financial institutions can positively harness this emotional response. Not to abuse potential new customers but rather paternalistically to assist customers and prospects to make good financial decisions. One way they can achieve this is to focus on effective storytelling targeted to stories that highlight financial success of the very demographic the institution is looking to attract. And good storytelling does elicit an emotional response. The FB article details that a Princeton Neuroscientist had determined that stories activate a particular part of the brain that converts the story into the listener’s own idea. While that may sound like manipulation, it is just a natural part of how our brains process information that we consume. That is why it is so important that banks focus on telling stories that lead to making good financial decisions. That is, that we are paternalistic, focusing our efforts on assisting our future customers to make good financial decisions. There are good ideas covered in the article, particularly when it comes to the marketing messages that an institution creates to sway new and existing customers to open accounts. While the examples referenced seem to be so simple, so … obvious, the results speak for themselves. A well-crafted message based in behavioral science can trigger a positive response. Similarly, messaging that alludes to potential downsides for leaving can also be effective. While inertia keeps a lot of people from making financial institution changes, it could be that an emotional decision could trigger an impulsive negative response, causing someone to want to or actually move their account. The “grass is always greener” effect is at work in these situations. In the end, most people want to know that the decisions they make align with the other people they consider to be their peers. While we must always be especially carefully to appropriately use data and methods that are in our customers best interests, we must not eschew cutting edge behavioral analytics and appropriate use of data to make compelling appeals and effective storytelling that is paternalistic. What do you think? Let me know at firstname.lastname@example.org.