Think Forward Initiative 2018

An initiative that empowers people to make better financial choices

What kind of mortgage is right for you? What are the potential pitfalls of a student loan? When should you start planning your pension? Making financial decisions is not easy, however unavoidable. So how do people make financial decisions and why? Follow this page to keep up with the latest Think Forward Initiative news!

Join the conversation on LinkedIn @Think Forward Initiative or Twitter @thinkforward

Deloitte and the Think Forward Initiative

The Think Forward Initiative (TFI) is a multi-year movement that brings together a range of experts and researchers to examine how and why we make financial choices. Deloitte is a knowledge and innovation partner to the Think Forward Initiative (TFI). Rapidly developing technologies enable us to radically improve and disrupt the future of financial services for consumers.

At Deloitte, we believe that organizations around the world have the ability to harness the potential of these technologies and innovate, playing a significant role in shaping and influencing the role companies are fulfilling in the future. With the initiative we move from research to solutions. Understanding why people make certain financial decisions, such as saving, investment and retirement and borrowing, spending and budgeting but also financial literacy. With these insights from research, more personal, instant and relevant solutions can be designed to adhere to consumer needs and to drive sustainable progress in society at large.

Follow this page to keep up with the latest Think Forward news.

Insights from the TFI Summit 2018

Financial decision-making: impact in action

The human species’ ability to think forward is in beta testing.

At least that’s what Harvard psychology professor and decision-making expert Dan Gilbert says. Although human beings have been around for millions of years, the software in our brains that allows us to think forward, or plan for the future, is actually quite ‘new’ — and it still has bugs.

“I’ve spent the last 25 years as a scientist trying to understand these bugs,” he said in a keynote speech at the third Think Forward Initiative Summit.

“Science is patching our think forward software but we have to go out and download the patches ourselves. That’s what we’re doing here today.”

The Think Forward Initiative Summit gathered around 150 experts from leading universities, research institutions, consumer organisations, NGOs, fintechs and financial services, all with a passion for empowering people make better financial decisions.

Watch the aftermovie below.

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Get the full event story of the 2018 Summit.

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What happened at the TFI Summit 2018

#10 TFI Research Challenge projects

The Think Forward Initiative brings together a range of experts to find out how and why we make financial choices. We have a research hub to “discover” issues, an accelerator to “solve” them, and a community to support the process and share solutions.

The TFI has launched the Research Challenge as part of its research activities. The aim of the Research Challenge is to explore how existing research into how consumers make financial decisions can be made directly relevant to the lives of consumers. The ultimate aim is to have several of these ideas developed further into a proof of concept through the TFI accelerator program. We’re aiming to build or have a substantial impact on actual tools that will help people make better financial decisions.

Below the eight researchprojects selected last year for the TFI Research Challenge.

  1. Garrett Meccariello and Tobias Nasgarde from the University of Pennsylvania. They propose an experiment to assess how consumers react to non-cash payments. 
  2. Tobin Hanspal and Claes Backman from Goethe University Frankfurt. They propose examining social links developed in multi-level marketing schemes and possible effects on the finances of individuals. 
  3. Nikhil Paradkar from Georgia Institute of Technology. The author proposes looking at whether the social links involved in credit risks in peer to peer lending programs changes credit risk. 
  4. Benjamin Timmermans from IBM. The author will look at the effect of financial warnings on irresponsible spending behaviour. 
  5. Nathanael Vellekoop and Olga Goldfayn from Goethe University Frankfurt. The authors will examine how much variance personality traits explain access to and use of credit. 
  6. Emma Woodley from Cowry Consulting. The author will look at young adults and financial control. 
  7. Krzysztof Makarski and Joanna Tyrowicz from Foundation of Admirers and Mavens of Economics, Group for Research in Applied Economics. The authors will examine whether current saving patters can be adopted and increased to offset increasing longevity and prevent old-age insufficient income and poverty. 
  8. Milo Bianchi from the University of Toulouse. The author will examine how financial literacy may lead to better investment decisions and thus reduce financial vulnerability

#9 What is the role of personality in consumer loan applications?

Most consumers will apply for a loan at least once in their life. This could be a mortgage, a car loan, a credit card, or even a higher overdraft limit on the current account. The decision to apply for a loan, repaying the debt, as well as feelings about the loan afterwards may depend on the personality of the consumer.    

Used in psychology, management and marketing for decades, the concept of personality has found its way into applied economics relatively recently, and has become a field of rapidly growing research, in part thanks to the strong and vocal support of Jim Heckman, a Nobel Prize in Economics laureate.

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What is the role of personality in consumer loan applications?

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#8 Peer-to-peer lending: Does it benefit everyone?

Those who need a loan are no longer confined to borrowing from traditional banking intermediaries. Peer-to-peer lending via marketplace lending (MPL) platforms is now an option for borrowers as well. Although this kind of lending is still only a small segment of the market, these platforms are experiencing a rapid growth in lending volumes. In 2017 alone, close to 500,000 peer-to-peer loan requests were funded in the United States, totalling more than 6 billion USD.

On marketplace lending platforms, individual borrowers post a loan request online and are directly connected with individual lenders. Peer-to-peer lending allows lenders to make their own decisions about whom to support, and the platform offers borrowers personalized interest rates based on the borrower’s personal profile and credit history. So who are these people that request loans on marketplace lending platforms?

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Peer-to-peer lending: Does it benefit everyone?

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#7 Lessons learned from a fika: How behavioral science can reduce online spending

Fika [fe:kah] is something that is taken almost religiously in Sweden (where Tobias hails from). Fika means having a break and sitting down with a coffee (lemonade or chocolate milk for the kids), a pastry and most importantly a good conversation with friends or family. Fikas have been central to the success of our research project in a number of ways. It was during one of our first fikas together that we discussed how to leverage our training in the behavioural and decision sciences in order to bridge the gap between business and academia in a way that can help people in their everyday lives.

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Lessons learned from a fika: How behavioral science can reduce online spending

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#6 Picture it! Feelings and thoughts about non-cash payments expressed through images

At Cowry Consulting we are studying how people think and feel about non-cash payments such as PayPal and ApplePay. We’re using new techniques that tap into the subconscious part of consumers’ minds to find out whether people feel more in control of their finances with the adoption of these types of payment methods.

One of the techniques we use is called a mental metaphor depth interview. We ask participants to come to an interview with a variety of pictures that represent their thoughts and feelings about a range of non-cash payments. We then ask them questions to delve into why they have chosen these images, and to elicit the emotional associations they are making with them.

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Picture it! Feelings and thoughts about non-cash payments expressed through images

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#5 Last Chance! Can warnings reduce online spending?

The temptations of buying online

Shoes, concert tickets, electronics… These are only a few of the increasing number of things we buy online. Our worldwide consumption of online goods has increased to 1.9 trillion in 2016 and is expected to grow to USD 4 trillion in 20201. As companies figure out how to digitally entice us with their latest products – fuelled by powerful analytics that improve products’ discovery and their attractiveness – it is increasingly tempting to spend too much money online. As most of us know, these purchases do not always serve our long-term interests. If we are not careful, we unnecessarily duplicate products that stock our shelves and wardrobes, and slow down our future saving goals with expensive interest rate charges as a result.

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Last Chance! Can warnings reduce online spending?

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#4 MoneyCoach, Limitless, Quotanda and Otly! are the 4 startups selected for the TFI accelerator’s growth track

About 2 weeks ago, the Think Forward Initiative celebrated the journey of its 3 pioneer incubator teams, on Demo Day. With the conclusion of phase 1 of the pilot, the focus now turns towards phase 2, the growth track. As we did in the incubator, we will continue learning from the outcomes of the growth track. This is to determine what best suits our path towards accelerating impact and ultimately, improving the lives of 100 million people.

Functioning as a 3-month part-time program, the TFI accelerator growth track is designed for startups impacting the lives of people, in the areas of daily financial decisions, financing the future and financial literacy. As part of the selection process, over 100 innovative startups within the financial services industry who also have great social impact potential were scouted. From that long list, 20 startups were shortlisted to participate. After evaluating factors relating to the team, their customer base, value proposition and financial sustainability, a final group of 9 startups was selected, to participate in Selection Day.

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4 startups selected for the TFI accelerator’s growth track

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#3 The cost of experiences: better save than sorry

An exotic vacation, a beautiful wedding, a new environmentally friendly car - these are all big-ticket items. And though they're not everyday expenses, they can still have an enormous impact on your budget. When there's not enough money on your account to pay for these things, you might consider borrowing the money instead. But whereas a personal loan may satisfy your current wishes, you'll need to pay off the debt later. Furthermore, if you're not careful, debts from various loans can quickly add up and create a heavy financial burden over time. Limiting the number of purchases that are paid with a loan would prevent a lot of people from getting into financial problems in the first place.

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The cost of experiences: better save than sorry

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#2 Improving borrowing behavior through social media analysis

Have you ever borrowed money to buy something and later regretted the decision? Maybe even wondered if you had temporarily lost your mind? If so, you’re not alone, at least judging by recent data on credit card debt, loan defaults, and home foreclosures. In research conducted for the TFI and U.S. National Science Foundation, data scientists Rich Colbaugh and Kristin Glass have developed methods to help people anticipate and avoid poor borrowing decisions by leveraging social media and machine learning. 

Studies of borrowing have tended to assume individuals act rationally and therefore have emphasized im-proved access to information and increased financial literacy as ways to help borrowers make better deci-sions. More recent research incorporates “non-rational” drivers of behavior, such as emotions and peer effects, into borrowing models. These models provide a more complete and accurate view of borrowing behavior and offer valuable insights, but also have significant limitations:

  • The models are descriptive, rather than predictive/prescriptive;
  • They require data on individual-level outcomes, the collection of which is typically labor-intensive (e.g. using surveys) and gives rise to privacy concerns;
  • Model estimation relies on standard econometric techniques, which may not be adequate in light of the nonlinear relationships and large-scale, high-dimensional, noisy datasets involved.
Improving Borrowing Behavior Through Social Media Analysis

#1 How an accelerator and research challenges are bringing more impact to decision-making

Imagine you were about to buy something big. You’re excited—maybe even a bit too excited. What if you had an app that used things like your financial data and social media posts to act as the voice of reason? An app to help convert the emotional aspects of the purchase into logic, all to help answer one big question.

Should you or shouldn’t you?

This app is one of the Think Forward Initiative (TFI) projects that entered into the TFI accelerator this month. The term “accelerator” is usually used more by techies than economists. But that’s part of the whole idea. In case you don’t remember, TFI works like this. Economists and behavioural scientists do research about how people make financial choices, then their insights are used to develop actual tools to help people. The goal is a financially savvy society where people make informed choices about their money.

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Think Forward Initiative takes it up a notch

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More about the Think Forward Initiative?

For more information about the Think Forward Initiative please contact Peter van Loon or Joep Arends via the contact details below or follow Think Forward Initiative on Twitter @ThinkForward or LinkedIn @Think Forward Initiative.

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