Behavioral Strategy for Financial Services
Definition. In financial services, Behavioral Strategy means choosing the right target behavior (saving, investing, repayment), validating feasibility in the real constraints of the population, then designing enablement and measurement around that behavior to achieve durable outcomes.
From Behavioral Strategy, developed by Jason Hreha.
Where it helps most
Behavioral Strategy is most useful when outcomes depend on completing a multi-step behavior chain:
- enabling and maintaining saving behaviors (deposit, auto-transfer, escalation),
- investment onboarding and continued contributions,
- repayment behaviors (on-time payments, minimum vs principal),
- adopting a budgeting system (not just downloading an app),
- completing identity, bank-link, and funding steps with low drop-off.
Typical target behaviors (examples)
Each behavior is written as: population does action in context within window.
- “New account holders link a bank account within 24 hours of signup.”
- “Eligible employees enroll in payroll deduction within 14 days of eligibility notice.”
- “New users enable auto-transfer within 7 days of account open.”
- “Budgeting users assign dollars to categories on 3 distinct days in the first 14 days.”
- “Investors make 2 contributions within the first 30 days after first funding.”
The leverage point: feasibility and matching
In finance, intent is cheap and friction is expensive. The behavior chain breaks on:
- identity steps (trust, legitimacy, fear of making a mistake),
- capability (numeracy, comprehension, account linking),
- context (cash flow instability, employment changes, fees, time pressure).
Choose behaviors that match the median segment constraints, then design rails that remove repeated decision burden where appropriate.
Case patterns (grounded examples)
- Configuration that works (and its limits): 401(k) auto-enrollment increases participation because payroll deduction is a low-effort, already-viable recurring behavior once configured. Defaults configure; they do not create viability. See: 401(k) auto-enrollment.
- Piggybacking on an existing behavior: Acorns makes saving/investing more feasible by attaching contributions to existing spending behavior (round-ups). See: Acorns.
- Removing fee friction changes the behavior set: zero-commission trading reduces a cost barrier for first-time investing behaviors (with downstream risk trade-offs). See: Robinhood.
- Infrastructure is the intervention: M-PESA scales transfers and savings-like behaviors through agent networks and low-friction rails, not persuasion. See: M-PESA.
- Budgeting as repeated behavior: “set a budget” is not a behavior. The behavior is repeated allocation decisions in context. See: YNAB vs Mint.
Measurement (credibility standard)
Finance behavior metrics should specify:
- denominator (eligible vs exposed vs opted-in),
- window (first 7/30/90 days, monthly cycle boundaries),
- persistence (repeat deposit, repeat payment, sustained use over multiple cycles),
- segment cuts (cash-flow constraints differ by cohort).
See: Measurement Standards.
Frequently asked questions
What is a target behavior in financial services?
A target behavior is a specific, observable action in a defined context and window (e.g., enable auto-transfer within 7 days of account open, or make 3 deposits in the first 30 days).
Why do finance products fail at durable behavior change?
Many failures are feasibility failures. Cash flow volatility, complexity, and required steps (KYC, linking, payroll) break the behavior chain. Messaging does not fix low fit.
Are defaults and nudges enough?
Defaults can change configuration decisions and can help when the underlying behavior is already viable, but they rarely substitute for behavior selection and system enablement.
How do you handle stable individual differences in finance?
Segment by constraints and predispositions (risk tolerance, self-control, planning horizon) and select behaviors that match; avoid designing one behavior path that assumes uniform capability.
What should we measure?
Measure behavior completion and persistence with explicit denominators and windows (e.g., first deposit within 7 days, monthly deposit consistency over 6 months), not self-reported intent or generic “engagement.”