In the financial services sector, the pressure is on to project a pristine profile in terms of adherence to regulations. Creating a culture of compliance makes things easier – which is where a little nudge theory can help…
A nudge is a kind of psychological trigger that encourages people to behave in a certain way. The idea of ‘nudges’ was developed by Richard Thaler and Cass Sunstein, as part of their behavioural economics theory. Nudges work by encouraging people to do something that they’re likely to do anyway.
Instead of bossy, top-down directives like ‘submit your expenses now!’, nudges feel much more natural and much less demanding. For example, take auto-enrolment pension schemes: it’s more effort to opt out of them than to opt in, which now happens automatically. The desired behaviour – getting people to think about saving for their retirement – happens without people having to think about it at all.
Here are some little nudges for your financial services organisation to make compliance the norm…
You’re more likely to do something if it’s easy instead of tedious. Employees will adopt tools – without nagging – that make their lives easier and feel effortless to use. With digital expense management, employees can snap photos of receipts with their smartphone and upload them instantly to expense claims. Better still, mobile usage delivers a 91% compliance rate for travel and expense policies, compared with 59% for non-mobile users, according to Aberdeen Group research.
Similarly, automated tools allow finance managers to view useful dashboards on compliance in one place. They can review trends by location, department, spend category and even individual employee. No more piles of paper or forbidding spreadsheets, all these data points are easy to access and play around with.
People like to feel that they’re consistent with their values and promises. Studies show that people are more likely to go out and vote if they have told someone that they will. In the same way, financial services clients will be reassured to see the people they deal with complying with their own internal finance policies.
For example, company credit cards can be linked to a tool like SAP Concur, which can then capture spend data and automatically convert it into an accurate expense claim. If a client sees financial services employees doing this after a shared lunch, they’ll be reassured their provider proactively practises what they preach.
As social animals, humans are hard-wired to want to follow the crowd. So once the operational and strategic benefits of automated spend management start to filter through, people start to think: ‘Everyone else is doing this, so I better do it too.’