• A major new behavioural study published today has revealed that people are able to manage and improve  their finances better when they receive bank statements through the post rather than online
  • The study by London Economics for the Keep Me Posted campaign, which is thought to be the biggest study of its kind, looked at the effectiveness of paper versus online statements. It found that:
        •  People were twice as likely to correctly identify how much money was in their account if they received the statement by post (82% vs 32% who received statements online)
        •  75% of those who received a paper statement were able to correctly assess the financial health of their account compared to 48% who received an online statement
        • Those who received paper statements were also better able to spot ways in which to improve their finances, such as reducing spending (90% compared to 77%)
  •  While many respondents said receiving information in an electronic format helped them manage their finances better, the result of the behavioural test found the opposite was true

A major new behavioural study published today has revealed that people are able tomanage and improve their finances better when they receive bank statements through the post rather than online.

The study by London Economics on behalf of the Keep Me Posted campaign which is thought to be the biggest study of its kind, looked at the effectiveness of paper versus online statements.

 

The study found that people were twice as likely to correctly identify how much money was in their account if they received the statement by post (82% vs 32% who receive statements online).

 

The results also showed that 75% of those who received a paper statement were able to correctly assess the financial health of their account compared to 48% who received an online statement.

 

In addition, those who received paper statements were also better able to spot ways in which to improve their finances, such as reducing spending (90% compared to 77%) or switching to an alternative account which offered a better deal (90% compared to 85%).

Perception versus Reality

The behavioural tests found that there is a disconnect between people’s perception and reality when it comes to the effectiveness of online statements versus paper statements. While many respondents said receiving information in an electronic format helped them manage their finances better, the result of the behavioural experiment found the opposite was true.

Results from the behavioural tests showed that consumers who received statements and other financial information by post were better able to:

        • Understand the information given 
        • Act on that information, and 
        • Make better financial decisions as a result than those who receive the same information electronically

In recent years, service providers such as banks and utility companies have increasingly migrated customers to online only statements and in some cases have reduced the frequency of paper bills and statements. However, this research, conducted by London Economics on behalf of Keep Me Posted, demonstrates that traditional paper bills and statements are of great benefit to an individual’s ability to manage their finances and may help people avoid detrimental situations, such as going overdrawn inadvertently or spending beyond their means.

Furthermore, these findings have important implications for organisations – such as governments and companies – that wish to promote positive behavioural changes among the public or their customers. In particular, the results indicate that providing information by post may be more likely to encourage individuals to take action and make better decisions.

 

Judith Donovan CBE,Chair of the Keep Me Posted campaign, urged consumers to take greater care when managing finances online. Shesaid: “People’s understanding of the information they receive has important implications on their ability to manage their money effectively. The findings confirm that receiving paper correspondence may help people manage their finances better. It can help them avoid going overdrawn inadvertently or spending beyond their means.”

Michelle Highman, Chief Executive, The Money Charity, said: “Keeping on top of your money by checking bank account balances and being aware of what’s coming in and out of your account has long been a key part of managing your money well. This research suggests that our assumptions that digital technology always helps us do this are not always accurate. It’s really important to be in control of your day to day situation, and so, whilst digital products will give you quick and easy access to your accounts, combining this with more traditional paper statements might help you with a more thorough monthly review of your finances.”

Hannah Poulton, Head of Multi-Channel Communications for Principality Building Society, which has adopted Keep Me Posted’s six-point pledge said: “The financial industry is complex and communication is the key to keeping people informed and empowered when it comes to making the right decisions about their finances. The evidence that people seem able to make better financial decisions if they have access to paper statements is compelling, and we hope that Principality’s commitment to retaining paper-based communications for those who prefer them will help our Members continue to manage their money better and keep their finances on a sound footing.”

 

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Editor’s Notes:

* Research taken from Keep Me Posted’s Behavioural economics study. Research carried out by YouGov and London Economics on behalf of Keep Me Posted in December 2014

**A healthy statement was defined to respondents as one that had a high amount of money coming in relative to the amount of money going out with evidence of good financial management such as no late payment fees, an unhealthy statement would be the opposite.

The experiment compared the responses and attitudes of two groups of people in a test scenario – one group was sent information by post and another group received the same information online.