How can we encourage new customers to open bank accounts? This was exactly the question the Bank of America asked itself in 2004. The question itself is not unusual, as probably most banks ask themselves the same question. But what set the Bank of America apart from these other banks was that they recognized a current lack of user perspective and decided to try a new approach to address this question – the design thinking approach. They partnered with IDEO, a global design and innovation consultancy firm that is known for its human-centered, ethnographic-based approach to design. Together they built a mixed team out of five Bank of America employees and four IDEO employees to tackle that question and boost the enrollment numbers.
Interviews and Observations
Instead of starting the project inside the walls of the Bank of America headquarters with for example marketing tactics, they went outside and conducted interviews and observations. They interviewed all different kinds of families and individuals, including people who were great at saving and people who were struggling with it. They did not only talk to people but also observed them. For example, they followed mothers around when they went shopping or dining. This helped the team study the existing, everyday habits around saving and figure out people’s relationship with money.
Conducting those interviews and observations, they decided to take a closer look at an extreme group of their customers – the so-called “extreme users”. The reason is, that those extreme users often seemed to have unconventional ways of solving banking problems, which could be used as an inspiration for the Bank of America. In our case, those extreme users were single mothers, that live from paycheck to paycheck. They struggle to save money, sometimes because they simply do not have enough money to put anything aside, sometimes because they cannot control their impulse buying, and sometimes because they have no time to worry about setting up a savings plan. In consequence, they feel powerless and not in control of their finances. In addition, they have a negative relationship with money because they associate it with all their negative experiences and fears, such as not being able to pay the bills on time.
Observing those extreme users, the team noticed an interesting pattern. Since banking apps and online banking were not yet widespread at that time, mothers often kept checkbooks, in which they listed their bills, expenses, and ATM withdrawals. This helped them keep track of the family budget. The team observed that in those checkbooks the single mothers often seemed to round numbers up. For example, instead of listing 31,35$ for a refueling bill, they would list 32$. When they interviewed the women, they found out that there were two reasons for this habit: first, to simplify calculations, and second to add a little buffer each month.
Brainstorming, Prototype, and Iterations
After finishing the interviews and observations, the Bank of America assembled a team of product managers, finance experts, software engineers, and operation experts for brainstorming. They held 20 sessions, generated 80 product concepts, and finished with one favored idea: the “Keep the Change” program. This is a service that automatically rounds up all purchases made with a debit card. These rounded up cents are then transferred to a savings account.
To test a prototype of the idea, the team created a cartoon video displaying the rounding up service. They presented the video to 1600 people and conducted an online survey among them. The response was extremely positive.
In several iterations, the product development team added three features to the idea: A summary of the rounded-up transactions in the account, a feature preventing a rounding-up transfer from pushing the user’s account into overdraft, and an additional incentive to use that service. The incentive was, that the Bank of America would double all savings up to a certain amount in the first three months.
The service launched in September 2005 and turned out to be a huge success for the Bank of America. In less than a year, the program attracted two million customers. It was very popular, not only with people who had difficulties saving money, but basically with all customers. 60% of all new customers enrolled in the program. Additionally, the program had an emotional effect. It removed the feeling of shame that came along with being unable to save money and replaced it with pride in taking more control over the finances.
There was an almost unexpected and very emotional effect from this new service. People who previously never had savings suddenly did. And it wasn’t the amount that mattered; even a small amount of money in their savings account gave them a sense of power and control over their finances.Faith Tucker – former Senior Vice President and product developer of the Bank of America