Wind forward 60 years from those early subliminal experiments and we are now witnessing the rapid emergence of behavioural science as a powerful force in our industry. Behavioural science which is altogether more highbrow than flashing a picture of a refreshing drink on the billboard in hot weather and will underpin the mass customisation of financial products.
We are, I believe, at the beginning of a period where specific data about each of us is becoming more available and increasingly detailed. With a few service calls and the relevant permissions, a look into your social media data could quickly profile you as a friendly risk taker who is prone to impulse purchases. This data could easily be used by behavioural scientists to manipulate consumers and direct behaviour. Bolt on some AI to learn the best way to sell and you get a powerful tool that any organisation could use as a black box to drive sales.
These techniques can be a very powerful tool for good. In the US new insurance entrant ‘Slice’ uses detailed understanding of behaviour to ensure consumers get precisely the insurance cover they need. Similar techniques are being used in the Investment sector to make arduous customer journeys shorter, and ensure that investments are appropriate to the customer’s circumstances.
But the same techniques used in isolation can be dangerous too. When I log into my bank and see that I could have a pre-approved loan “now” is that a nudge? And is it a nudge in the wrong direction without a whole lot more data about me?
When the combination of behavioural science, Big Data and AI becomes as pervasive as I expect it to be, will the FCA even be able to see the subliminal messages any more, much less regulate them?
This article first appeared in Banking Technology in July 2017