Fintech-focused consulting firm Mondato published research spotlighting "nudging" - a promising tactic that could to be the way of the future in financial services, marrying behavioral science with real-world applications to increase fiscal responsibility for consumers of all socioeconomic backgrounds. Originating from the thought laboratories of Nobel Prize winners, nudging manifests in digital finance in numerous ways, with different approaches taken and diverging results desired — mostly for good.

Below, Mondato spotlights the specific nudging technology used by Flourish portfolio company Juntos Global to help customers achieve financial health. Read the full article here.

For nudging services with other goals in mind, it can be combined with various methods to overcome the greatest barrier between financial institutions and clients: trust. Juntos Global partners with financial institutions around the world to engage customers in two-way conversations over mobile channels to build relationships and increase comfort they have with financial products. When a new customer at a bank is contacted by Juntos’ messaging service, nudging is not immediately put to work.

Employing behavioral scientists — like most nudging-inspired fintechs — Juntos’ AI-driven messaging services initially focus on developing a relationship with its consumers, maybe asking them about their commute and using that information as a springboard to note ATM locations on their way to work. Tidbits of financial literacy knowledge are sprinkled in from time-to-time by the AI, which is taken over by customer service agents when the conversations exceed the AI’s conversational capabilities. Only when trust is forged with consumers will Juntos’ messaging service begin to first note options available to them, followed by outright nudging. With this philosophy in mind, Juntos shies away from the “libertarian paternalism” labeling of nudging, viewing it as somewhat counter to the more holistic approach it takes in building trust.

Juntos takes a long-term strategy on nudging, which it believes is the best way to sustainably apply its concepts. Jack Parker, Senior Client Services Manager at Juntos, described one partner in Africa that saw approximately 5,000 to 10,000 people begin responding to messages a full 12 months after messaging first began.

Rather than seeing diminishing returns over time, Juntos tends to see customer engagement grow as trust increases and it slowly incorporates nudging along with several other behavioral techniques. Parker says Juntos’ clients range from traditional banks to MFIs and telcos. Though seeking to avoid over-generalization, he noted certain telcos’ promotion-oriented, immediate term approach sometimes fell short of the aim of nudging, in contrast to a more patient outlook extolled by many retail banks.