The Psychology of Push Notifications: Are FinTech Apps Nudging Us Too Hard?

While you’re reading this blog, you’re likely to hear the ping of several push notification strategies pop up on your device. These are very popular with apps and fintech solutions of all kinds, with the psychology of push notifications suggesting that this is a great way to foster engagement with users. However, as our devices ping away, are these nudges going too far?

Nudges – The arguments for

There is a reason that push notifications are so popular – with the average US smartphone user receiving 46 app push notifications a day - because simply put they work. These have become an effective tool for many app developers as a way of engaging with their users and encouraging them to interact more often with their interface. The psychology behind app nudges comes down to three key drivers:

• Urgency and FOMO. Push notifications create a sense of urgency and leverage our natural fear of missing out, or FOMO. For example, if we get a notification from our bank saying “the latest insights from your spending now available” or your health monitoring app pops up with “limited time only, 50% off custom diet plans” this will naturally encourage you to log on.
• We lead busy lives, and our attention will naturally be pulled in multiple different directions at any given time. This means apps have to work harder to command our attention – therefore the ping on our phone can be a simple but helpful way for apps to attract this. Even if the user doesn’t click though, push notifications at very least can remind the user that the app exists!
• Technology is now allowing push notifications to become more sophisticated, and they can be tailored to a person’s identity, interests and behaviours. This can enhance the push notification and improve how it resonates with that user, helping improve click through rates.

This has meant targeted push notifications have become very powerful tools for fintech solutions, especially given fintech solutions will be inextricably linked to a person’s everyday life. Frequent financial app nudges, especially those with helpful guidance and unique insights, can help users in their day-to-day spending, saving, investing and so forth. This can help bring finance to their front of mind, and not something they ignore.

Nudges – The arguments against

Of course, there are downsides and recently more smartphone users are suffering from notification fatigue due to push notification overload. App developers will often make the mistake of forgetting that their users will be signed up to multiple apps and over time each app’s push notifications can add up.

Alarmingly, users don’t need to receive an extreme amount of push notifications before they disable these. Studies have found that people’s appetite for nudges can be low and 42% would disable notifications if they received three to six weekly notifications from a single app. In fact, getting too many push notifications is the primary reason for disabling these – with data finding this the reason for 73% of users to classify nudges as spam. This is much more than other reasons, such as users regarding these as clickbait (55%) or irrelevant (10%).

This will vary across both sector and geography (the average click through rate in Asia is 8% while this is 6.9% in South America), but this regardless shows fintech solutions there is a careful balance to strike when sending out push notifications.

Making notifications work for fintech users

To ensure only persuasive notifications are sent, fintech notification systems must ensure they are only sending valuable information to users.

A powerful first step can be to simplify these push notifications – there is only a small area of real estate on a smartphone screen to work with, so a personal finance app nudge must be concise. Things like “ISA season ends in three days, are you ready?” and “new spending insights now available” can be simple but effective. Also, remember too many nudges can run a real risk of notification disablement.

Personalisation is also key. If someone signs up to a fintech solution for a specific savings or investment goal, this should be reflected in the push notifications they receive. For example, “you have a growth portfolio, see which equities did best this week” or “you’re 75% of the way to your savings goal, lets get over the line”. These can also be timed to coincide with special occasions, like “here’s a birthday offer – happy birthday!” and “your anniversary is around the corner, but how has your portfolio fared?” Done right, and push notifications can be a great way to foster online engagement and – specifically to fintech – foster proactive and healthy financial habits. The golden rule is simple though: less is more!

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