Banks play 'mind games' to woo customers

Pradipta Sarkar, 37, is saving Rs 10,000 every month, one-fifth of his take-home salary, in a fixed income-linked systematic investment fund (SIP) to build his retirement corpus. But being a soccer fan, his dream is to cheer for his favourite team, Germany, from stadia in the World Cup matches some day.

Would Sarkar, an information technology sector employee, set aside Rs 3,000 in high-return investment schemes, and reduce his monthly retirement savings to Rs 7,000, to materialise his soccer dream?

Banks now have a powerful tool — behavioural science — to figure that out. Lenders are of the opinion that by knowing short-term private dreams of their customers and giving personalised attention to achieve them, the stickiness of customers will improve.

Psychologists say there is a science behind it. “Most people tend to choose short-term goals over long-term objectives, and the propensity for immediate gratification is very powerful in human psyche,” said Dr Jawaharlal Mehta, a Mumbai-based psychiatrist.

However, “the downside is, when you reach the stage where long-term converges with the present, and if you have not prepared enough, you will find yourself nowhere,” Dr Mehta added.

Behavioural science is already being used for selling a variety of products, but using it for financial products is an extension of a wealth-management practice, where managers define ‘goals’ for the customer rather than returns, said a senior executive of a large private bank.

Banks in India have been using goal-oriented products for two-three years now. Some foreign banks as well as a few private banks in India could be working on knowing their customers up close and personal to boost their business. Big data and ‘games’ are the tools of the trade.