New research from CBA’s financial wellbeing team shows how instant and well-timed digital nudges about financial trade-offs can impact customers’ decisions on how to allocate funds, with the potential to significantly improve a person’s financial wellbeing.

As part of the research1, CBA customers – who consistently incur credit card interest – were prompted to think about how they could best use their annual tax refund. 

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Along with messages to consider making a credit card repayment, additional information was provided to customers about the benefits of reducing their debt, including savings on interest or avoiding late fees.

These prompts or ‘digital nudges’ helped deliver a shift in customer behaviour. Customers who engaged with the credit card repayment nudge, repaid an average of $541 more in the month following their tax refund.

Commonwealth Bank’s Chief Data & Analytics Officer, Dr Andrew McMullan, said: “Behavioural science tells us we view windfall gains, such as our annual tax refund, differently compared to our regular income. We tend to mentally put these funds into a ‘free money’ category which means we’re more likely to spend these funds without considering opportunity costs.

“Our behavioural economics team have been looking into the importance of providing customers with timely information about trade-offs when making financial decisions, and this recently led us to launch a new feature in the CommBank app.”

The new feature lets customers know – in real-time – when their tax refund hits their account and provides a targeted message to encourage customers to consider how best to use their tax refund to improve their financial wellbeing

The feature is driven by the bank’s Customer Engagement Engine – using Artificial Intelligence, machine learning and insights from customer activity – to offer targeted notifications to eligible customers as soon as they receive their tax refund.

“Using our data and decision science expertise, and also powerful Customer Engagement Engine which leverages 157 billion data points across customer interactions every day, we’re able to offer personalised suggestions to encourage customers to think of ways to use their tax refund to work towards their financial goals, as soon as the refund hits their account,” Dr McMullan said.

The new feature in the CommBank app was first trialled last year2, with more than one million customers sent digital prompts to encourage them to consider saving some of their tax refund or, where more relevant, make a credit card repayment.

“The trial showed that if the credit card nudge was rolled out to all eligible customers, this would result in more than $4 million in ‘catch-up’ credit card repayments each year. The results highlight that proactively contacting customers in a targeted manner and at the right time can help them to follow through on their intentions and make meaningful progress towards their goals,” Dr McMullan said.

“And when you consider the average tax refundis approximately $2,400, it is clear that tax time provides an ideal opportunity for many Australians to accelerate their financial goals – whether that is getting back on track with their debts, saving for a rainy day, or investing. With so many Australians impacted economically by COVID, we are making sure we’re providing timely app features to help customers make informed financial decisions.”

Dr McMullan said the new app feature is another example of how CBA is applying powerful data and digital capabilities to reimagine products and services, with the ultimate goal of offering customers the best digital experience globally.

Notes for editors

  1. Internal research conducted by CBA’s Financial Wellbeing and Behavioural Economics teams.
  2. The trial was eligible to customers who consistently incurred interest repayments on their credit card for at least 3 months.
  3. CBA analysis on retail customers in FY2020 highlighted 3.2 million customers received ATO tax refunds, with an average tax refund of approximately $2,400.