Think Forward Initiative helps “flesh and blood” decision-makers
1 March 2016
From professor to politician, from economist to technology expert – everyone at the Think Forward Summit in Brussels last week had at least one thing in common: a passion for helping people make better financial decisions.
That passion is needed, as ING research shows that a vast majority of Europeans believe young people have to make more and tougher financial decisions than previous generations. And yet one-third of young Europeans feel they have little or no control over their finances, struggling with financial management. This is just one example.
The Think Forward Summit on 25 February addressed this and more, gathering more than 120 academics, European and national policy-makers, consumer-organisation representatives, and leaders from the financial and technology sectors in a “meeting of the minds”. They came away having formulated specific issues to focus on and with a clear commitment to continue working together to help consumers.
“Ultimately the challenge is, how do we create a prosperous Europe,” said Monica Woodley of The Economist, who also led one of the Summit’s breakout sessions. “How do we give individuals and households the tools they need to create their own prosperity, and to help them protect it? How do we get financial institutions to do the right thing by these people? How do we get regulators and policymakers to create the right environment for this? It’s a lot of different challenges for a lot of different stakeholders.”
The Summit was the official kick-off to the Think Forward Initiative, a multi-year movement set up by ING, EMC, Microsoft and The Institute for New Economic Thinking to perform more research into the drivers of financial decision making, while bringing together a range of stakeholders to identify challenges and figure out how to solve them.
Emotions at play
Issues discussed throughout the day related to what influences our decisions, including emotions, our physical state, and the people around us, from our family to co-workers, to strangers on social media.
“These are the challenges we face as flesh and blood decision-makers,” said renowned economist and best-selling author Noreena Hertz in her keynote speech. She gave an example of judges who were more prone to give favourable verdicts if they had just had lunch.
“It’s not that we can’t be emotional, but we need to get better at noting our emotional state and the influence it has on us,” she said. Technology can help us do that, she said.
From data and innovation to financial literacy
Technology was also a theme throughout the day – how data and innovation could help improve our financial knowledge and decisions.
“In many real-world decisions there’s a conflict between our present and future selves, which also extends to retirement for example,” said Dan Goldstein, principal researcher at Microsoft. “The present self fails to save for retirement, which leaves the future self with nothing. We need to simulate the future for people using technology, make the future more vivid.”
Financial literacy is vital as well, according to award-winning economist and professor Annamaria Lusardi in her keynote speech. Research shows that 30%-40% of wealth inequality can be attributed to a lack of financial knowledge, she said.
“We all need a driving license to go on the road—the same is true for financial literacy,” she said. “We have corporate finance in college, but not personal finance. We need programmes that can get financial literacy to work in schools, but also at work and in communities.”
Deeper look at challenges
These inspiring talks sparked the debates held in break-out sessions, where participants delved deeper into identifying the challenges and agreeing on next steps.
The challenge statements participants formulated included, for example, how to enable people to feel comfortable in their spending and budgeting decisions; how to reach people at the right time and in a personally relevant way to keep them financially healthy; how best to make sense of the institutional factors behind savings behaviours; and on finding the right value of big data for customers.
Enthusiasm and commitment
The Think Forward Summit sparked enthusiasm among participants to continue with next steps. Many committed to injecting time and energy into future working groups that will suggest research, possible policy recommendations and awareness campaigns; and possible technology projects that will define and build tools to help consumers manage their personal finances.
Content created based on these group discussions will be published to continue driving awareness throughout Europe and elsewhere.
By the end of 2016, first steps will have been made in more research, and the possible new tools and policy recommendations, aiming for a definitive positive impact on the way consumers spend their money. The results are expected to be presented at a Think Forward Summit in 2017.
ING CEO Ralph Hamers stressed that this is an “open-source” initiative, and all help is welcome and needed to really effect change. Noreena Hertz echoed that sentiment in her speech.
“If the goal is to create a movement of greater financial empowerment,” she said, “then co-creation should be the maxim that we all aspire to.”