Want to make better financial decisions? Paper could be the key

7th February 2015

Lots of lovely press coverage this week after the launch of our report on managing money online – so do take a look. You'll find the executive summary here

Basically, after lots of anecdotal evidence, we decided to test whether there was any scientific evidence to see whether people are more likely to respond to items sent by post, and whether they are more likely to understand the information sent to them.

London Economics conducted a study where they sent out over 3,000 bank statements to people; half by post, and half by email with log on details for an online portal. They then asked them a series of questions to test their understanding.

Even we were surprised by the results.  Firstly, the report found that people were much more likely to respond to the paper version - 80% of the postage group responded to the study compared to just 54% per cent of the electronic group. 

But in addition, the research consistently showed that people (a) understood the information better and (b) made better financial decisions as a result.  People were more than twice as likely to correctly identify how much money was in their account if they received the statement by post. 

Though of course some people prefer to manage their finances online, some of the comments attached to our stories include “This does not surprise me. Given the number of emails I receive in a day it is very easy for me to ignore electronic notifications. It is much harder for me to ignore the stack of paper building up next to my door.” And “For me paper statements are much better because they don't require me to initiate checking my statement myself - they come in the post, so I don't forget to look at them.”

We think that this has implications not only for financial services, but more broadly.  Any company - or indeed pubic body - that is looking to engage with customers or get them to respond should be thinking about whether moving them online is always the best way to do it. 

We’re also debating the research next Wednesday with some invited guests from the world of finance, so do keep an eye on the website to see what they’re saying.

 

But in the meantime if you’re thinking about ways to better manage your money, we do have some top tips given to us by our supporter The Money Charity. Do take a look and see if you can save yourself some hard-earned cash.  

Judith Donovan