Transforming Fintech with Behavioral Science Insights from Kristen Berman of Irrational Labs

Episode Overview

Kristen Berman is a pioneering expert in behavioral science, renowned for her work in applying psychological insights to improve product design and user experiences. She is the CEO and co-founder of Irrational Labs, a leading behavioral science consulting firm that she established with Dan Ariely in 2013. Through Irrational Labs, Kristen has worked with major companies like Google, PayPal, Netflix, and Facebook, helping them integrate behavioral economics into their products and services to enhance user satisfaction and business outcomes. Kristen’s work focuses on understanding the often irrational ways people make decisions and using this knowledge to design environments that encourage healthier, wealthier, and happier choices.

In addition to her role at Irrational Labs, Kristen co-founded the Common Cents Lab at Duke University, an initiative dedicated to improving the financial well-being of low- to middle-income Americans. Her work at Common Cents Lab involves launching experiments and developing tools that help people make better financial decisions. Kristen was also a founding member of the behavioral economics group at Google, where she helped shape the company’s approach to incorporating behavioral science across multiple teams. Her contributions to the field extend beyond her corporate work; she has co-authored workbooks like “Hacking Human Nature for Good,” which are used by organizations worldwide to implement behavioral strategies.

Kristen is a sought-after speaker and thought leader in the behavioral science community. She has been featured in prominent publications such as Stanford Social Innovation Review, Scientific American, and TechCrunch. Kristen also hosts one of the top behavioral change conferences globally, Startup On omics, which brings together leading minds in the field to explore the latest trends and applications of behavioral science. Her work continues to influence the way companies design their products and services, ensuring that they are aligned with how people actually think and behave, rather than how we assume they should​ (Kristen Berman)​ (Irrational Labs)​ (Behavioral Scientist).

Episode Transcript

Kevin Rosenquist: Hey welcome to Pay Pod  where we bring you conversations with the trailblazers shaping the future of payments and fintech. My name is Kevin Rosenquist. Thanks for listening. Kristen Berman studies how people actually act in the marketplace instead of how we assume they should or would act if they were completely rational. She is the CEO and co-founder of Irrational Labs a company that focuses on leveraging behavioral science to improve products and services. Her and her team work with companies to find where they may be losing potential conversions and to improve their overall user experience. We talk marketing fintech nudge theory and plenty about how people behave. Joining me now is Kristin Berman. Your website says we apply behavioral science to make people happier, healthier and wealthier. I’m a really happy guy reasonably healthy. But I could stand to be wealthier. So. So I’m in. How does this work? Do you do you write me a check? Or like how does this work?

Kristen Berman: Yeah the check’s in the mail. You just have to open the envelope which is where behavioral science comes in. Now we basically behavioral science attempts to understand the psychology of our decision making and then design solutions to help people behave in the way that they want to behave. But sometimes is is more difficult. And so in the domains of health this is kind of obvious. We all want to maybe be a little bit thinner than we are and we would eat the cookie if it’s close to us and maybe not eat the cookie if it’s not there. And in the domain hunt down.

Kevin Rosenquist: The cookie if I’m really motivated. Yeah.

Kristen Berman: You gotta hide that that is some of the the question is are we present bias? Can we enact some self-control? Turns out willpower doesn’t matter as much as we think. And so in the domain of finance hopefully it’s a little bit obvious. But you have these things of present bias and self-control where people when they’re dealing with money may make decisions that are not in their particular best interest or their goals. We may spend more than we want to. We may not spend on things that would make us happier. And so behavioral science is a field studies these types of decisions. And particularly our company Irrational Labs does this with banks and credit unions and fintechs to design products that help businesses and consumers basically do something do anything make any decision take any action.

Kevin Rosenquist: Obviously using psychology and behavioral science and product building or marketing isn’t isn’t new but it’s certainly a lot different than it was back in the Mad Men days you know? Are there principles that are still the same as they always have been or has technology online shopping social media etc. completely changed how behavioral sciences is leveraged in business?

Kristen Berman: Yes and no. So there are some universal principles of han behavior that are pretty sticky. What has changed is as you mentioned the context. And so one main theory in behavioral science is that our attitudes, our preferences and our beliefs are interesting but they don’t necessarily predict our behavior. What does predict our behavior is the environment of our decision making which means the context. Or if you’re listening and you’re a PM or a marketer the things that you build on my app or my phone or my desktop will influence my decisions. And so obviously that has changed. And if our environment has changed and we are not necessarily going into the teller every Saturday and having a conversation with them instead we are logging into our bank and have to forget password. The context has changed. And so in behavioral science that’s kind of some of the punchline is we have to study the environment of decision making in order to figure out how to change behavior. And so with kind of a digital world not only is testing becoming easier but also it has become harder because our the context is so different.

Kevin Rosenquist: So basically it comes down to user experience.

Kristen Berman: Yeah. I mean that you know we study choice architecture which is kind of the fancy word for user experience which is how you are interacting with the environment. So again is the cookie close or far. Is the marketing landing page. Does it have five fields or two fields. And sadly this impacts our decision making. In a perfect world it wouldn’t. In a perfect world you’d have a very fixed preference about the type of banking you wanted to do the type of product you wanted to engage with and the design of the site would have no relevance. But if you’ve ever if you’ve ever been a marketer or a product manager or a copy designer you know that that’s just not true that the design of the system does impact the users. And that’s really how behavioral science has progressed over the last the last decade is by studying the environment of people’s decisions within the context of many times these digital products.

Kevin Rosenquist: It always amazes me how bad the user experience is for so many successful companies. Like just high level companies that you go on their streaming platform or their app or their whatever or their website and you’re just like this is what I have to do. Yeah that’s what year is it like? How why are so many I don’t know like really larger big successful companies still struggling with this?

Kristen Berman: I think I think we let me give you a story. So we once worked with a large company on their conversion onboarding flow. And you know we went in there and said hey look there’s an open text field that asks you to describe your business. This is to small businesses and in theory small businesses should know this. This is not a novel question. They know what they are. If you’re a flower company you have a flower company. You know if you’re a consulting services business or a manufacturer these are just like not hard questions. And yet when we came in and said hey we should really remove this field because it is hard for people to complete and they are likely stumbling. And we can increase your conversion and get more people to like the actual value of your product. If we remove this, no one believed us. They said look this is you know this is a five years ago now. People have more of an understanding of this. But I think the principle is they said look if people are on the page they know what their business is. That’s not going to be a problem for them. And so what our team did was basically test different ways to enter that data.

Kristen Berman: So we said okay well we’re just going to recruit. I think we actually got like a thousand small businesses and we put them through an online study. And we asked them to describe their small business and then we timed them. And then we had a drop down menu and then we had a dial. And we had like different ways to ask the question. We timed it. And once the engineers saw that how you would describe that question in the first one was 40s you know this was wild of course. And then the other one was like three seconds. And then they let us remove it from the page. And this increased page over page conversion in the double digits And so the theory there is people don’t think or appreciate how small frictions can get in our way. We also think that people are more rational than they are. Why? Because we think we are more rational. Like I would never not be able to enter that very simple question. Of course my consumers or my customers can. And so we’re projecting a lot onto people not appreciating that the environment of decision making actually does impact us more than we want to admit.

Kevin Rosenquist: Yeah. And I think.

Kevin Rosenquist: That’s that.

Kevin Rosenquist: That’s interesting. I mean I wouldn’t necessarily have thought of that but it does make sense because also like open fields freak people out right? Like because a lot of people don’t like writing even if it’s an email or anything. I mean look, the ChatGPT is saving people so much headache and so much inner turmoil. So it makes sense to me that doing something like a drop down would make a lot more sense. Right.

Kristen Berman: And now we kind of appreciate that. And I think that’s one of the places where behavioral science has changed is like that idea of 5 or 6 years ago was actually pretty novel. Now is the web has progressed or is progressing. We’ve got more ability to track user behavior. People understand that these small frictions are important and I would say that’s one of the more universal ideas in in behavioral science which is not super novel but like things that people do the things that are easy we take the path of least resistance. You know obviously there are people bring up long sign up flows like Noom or whatever and like say ah but what about those guys? And it’s like of course you know and there are definitely reasons and we can talk about why sometimes long signup flows work. But by and large when you make something easy more people do it. When you make it harder less people do it. And this type of universal law of han behavior applies across domains and across time. So that along with present bias is kind of one of the things that has like been steady over the years is like we do react more when the cookies in front of us versus like you have to wait a week or wait a year for a cookie we will want the cookie now if it’s in front of us.

Kevin Rosenquist: Yeah years. A long time to wait for a cookie.

Kristen Berman: Yours? A long time.

Kevin Rosenquist: But a really really good cookie.

Kristen Berman: Yeah it would but this type of discounting is like. It’s just a cookie. How? You know it’s the same cookie. But if time matters when you ask me if I want the cookie and how much I’m willing to pay for it is actually not about the cookie. It’s about when you ask me if I want the cookie.

Kevin Rosenquist: Yeah yeah yeah that makes sense. There’s a lot of that that you’re talking about because we fill out so many online forms and we do so much of that because we want to do we want to get an app we want to sign up for an online account. We want to do this. I mean it’s I feel like I enter in my email address so many times I actually love like connecting my Google account. I don’t know if that’s good or bad but it’s so much easier. You know I just click on my Google account and it works. So you think that has something to do with it? Are there some fatigue there?

Kristen Berman: I think actually companies are figuring it out that users like something that’s easy. So plaid just announced an easy KYC  ability which is basically you would enter your phone number into plaid and you would already KYC with plaid and then plaid would authorize you to give all the data to a potential lender. They’re saying that this has improved conversion flows by 10 or 20% which is a very large amount for these types of onboarding flows. And so I think there’s something universal here. And as we progress as a digital community we’re figuring out that the likelihood of somebody wanting to enter a really long form is just low. Like and it’s not about the thing on the other side. It doesn’t mean that your product is less valuable. It doesn’t mean that people don’t like it. It just means that today they don’t want to fill out a form like. And so if you can make the form easier, more people will get into your product. And if you get that equation right that’s very impactful to companies.

Kevin Rosenquist: So I’m no psychologist. I want to get that out of the way. But I do try to consider psychology in various situations. Like if I hear someone say something horrible or read about someone doing or saying something bad I try not to immediately go oh my God they’re a monster. I try to think about how they became who they are or why they’re feeling compelled to say the things that they’re saying. But you know oftentimes I still end up deciding they’re a monster. But in a world where so many people end up in social media bubbles where they’re constantly being fed things that reinforce their opinions does it does it make it harder to use behavioral science to market to people or does it make it easier?

Kristen Berman: Yeah. So what you’re basically doing the first is very nice which is basically an attribution bias which is when I do something it’s because let’s say there was lots of traffic. I was late because there was lots of traffic. When you do something you’re late because you’re lazy. And you know we try to understand.

Kevin Rosenquist: That bad time management skills.

Kristen Berman: We Try to understand people but many times we attribute their behavior to their core personality versus the environment versus for us when we’re analyzing our own behavior we attribute it to the environment. And so understanding other people is actually very difficult because one we just don’t see their full context. Contacts. Like if I were to see that you were stuck in traffic that’s much easier for me than to assign you that concept. I don’t see that. And so you know as our world has become more digital more global more anonymous we don’t see people’s context as much to really understand where they’re coming from. And then we tend to ascribe to the other side that they’re doing this because they are you know fill in some adjective you know annoying person that you don’t want to be around. We don’t actually appreciate maybe their context and what drove them to have that belief in the first place which makes obviously starting conversations much much more difficult.  as for behavior change around it, our team worked with TikTok on a study to reduce misinformation. So basically TikTok called us up and said like the word call they called us up.

Kevin Rosenquist: They called you up.

Kristen Berman: It was an email. You’re like TikTok’s calling.

Kevin Rosenquist: I’m like oh.

Kristen Berman: I think it’s calling. But this was a few years ago when basically pre-election and Twitter and Facebook had already a fair amount of strategy. You know TikTok actually is late to the game here. Like Twitter and Facebook have been going on for much longer and they didn’t have a misinformation strategy built out which meant they didn’t have a label or anything to tell you when something was coded by third party as as misinformation. We can debate kind of how you do the coding and all these things and that’s a good debate. But for us we’re basically given the challenge of how do you decrease sharing behavior when something has been labeled as misinformation? It has been said to be like this is not necessarily verifiable. And again things that are totally wrong and harmful to society are immediately taken off the platform. So we’re talking more about the gray area where it says look we can’t verify this and we kind of need to like have a label on it. And this is a now a norm in the industry. So our team said look we could try to change people’s attitudes preferences and beliefs here that would you know involve a lot of potential media literacy. By the way media literacy doesn’t have much empirical evidence behind it. Why? It’s just like you have to teach people a lot of things about the other side and then teach them how to behave in the moment so that they can make a decision about who to trust and who not to trust. And then they have to do the thing in the moment that they just learned a week ago like very difficult. And so the intervention and I would say most interventions in behavioral science tend to be just in time which is in the moment of decision making.

Kristen Berman: You want to intervene to help people do the thing that they likely want to do. And by the way for misinformation the main thing is people want to be accurate. There’s no like this belief that people want to share. That’s disinformation. Some people do share it but most of us when we’re viewing things online actually want to be seen as accurate and be accurate. And so if you believe that then we basically took kind of the classic theory in behavioral science which is you do something that’s easy and you don’t do something that’s harder. And so not only do we put a label on the video that said this isn’t verified but we also had a pop up. Are you sure you want to share this? And just by having a pop up that said are you sure or cancel? We reduced shares from TikTok misinformation by 24%. We didn’t change any. We didn’t change any minds. We just changed their behavior. And so I think kind of your question before is like is it harder to change people’s behavior in an online world that is so noisy in the social world is like for sure. And some of the classic laws still still apply that if you slow people down like most of us want to have good intent we want to do the right thing. And sometimes we’re in a hot state in social media and we can we can kind of use some of these tactics to help behavior at state.

Kevin Rosenquist: I like that that’s a very kind way of saying it. I think you kind of touched on this before. We’re an irrational people. Although I most of us like to consider ourselves rational. When you talk about consumers being irrational you’re not name calling or making fun of them I think. I guess I can’t confirm that but talk about what you mean by that.

Kristen Berman: Yeah. So in a pure economic world we’re making decisions based on time and utility all the time. When we go to the coffee shop and we’re figuring out whether to spend $3 on coffee we’re thinking about well is there something else I could spend right now with my $3? Could I spend something else later in the day with a $3? Should I invest this in the market? Like we’re actually having. And because money is just opportunity cost at the base level. And so we’re we should be having if we’re purely economic beings these time of time and utility decisions all the time with ourselves obviously the reality is we’re not this would be very stressful. It’d be time consuming. We’d be very cognitively tired. We just don’t do this stressful. It’d be very stressful.

Kevin Rosenquist: I mean I’m already kind of like that but not when it comes to $3 coffee so I can’t add that to the list. Kristen I can’t.

Kristen Berman: Instead we take mental shortcuts and we look around us and look for cues in our environment to figure out what to do. So weirdly if there’s a long line at a restaurant we may want to go into it more than a restaurant that has no line even though it’s shorter to go to that restaurant or coffee shop right? So we’re looking around and we’re saying wow social norms. More people like this restaurant. Instead of having a time and utility based on my fixed preferences of something I’m going to use a heuristic like social norms in order to make a decision. Is that purely irrational? Well if you were to like take all of the inputs you could possibly have you’re kind of cheating a bit because you’re using some heuristic that isn’t a purely economical decision. I think the word irrational gets people like in a little bit of a tizzy. It’s actually like it’s a shortcut to say we use a lot of heuristics in our decision making. Those may not fully align with your long term or your short term preferences many times and they’re shortcuts in our thinking.

Kevin Rosenquist: A good salesperson can sell you on something without you even realizing it right? When were sold we’re sold to and marketed to constantly. These days there’s varying figures but I’ve seen stats that say we’re marketed to 6 to 10000 times per day which is hard to wrap your head around but but it leads to something we refer to as ad ad fatigue. How can you use behavioral science to help companies bust through that ad fatigue barrier?

Kristen Berman: Yeah. You know transparently we’re not. So like a lot of my research is empirical research where we you know we do these experiments and we try to figure out how to change behavior. I have yet to do an experiment with reducing ad fatigue. So I’ll take the liberty to brainstorm theories about what would do this. If we were to do an experiment with this what we would want to do is fatigue people. We would want to show them lots of ads and try to figure out which ad could break through and get folks to click. My hypothesis here is curiosity and novelty. So have I told you about my mother?

Kevin Rosenquist: No.

Kristen Berman: Now you’re thinking about my mother. And there’s nothing about my mother. But you are now curious pepper.

Kevin Rosenquist: Hope she’s okay. What’s going on with her mom? Like what’s the guy.

Kristen Berman: That bourbon is probably listening but so leveling people into kind of a mindset that says there’s something I don’t know is an interesting way to engage folks. And obviously kind of a d. If you looked around and seen our current ads do this all the time you know five ways to do X what about number four? Like the intuitive nature of the headlines have figured this out and then some sense of of novelty. There was a campaign on TikTok recently where Porsche did something where they had like cars that looked like Crocs. And I don’t know if this was like a video. Yeah yeah shoes. Like cars. Crocs driving around. It was wild. I watched it like five times. And that they had to invest either a lot in the video animation there or actually building a car like looks like a croc. That’d be wild but it was so different that people kind of pay attention. And so it’s almost like we’re in a fight to kind of have that novelty element to get people’s attention. And so you know we could say that’s good. Or you know it’s cool that Porsche did that. That’s actually like a wild entertaining thing. And also oh my God you have to make a croc that’s a shoe in order to get our attention these days.

Kevin Rosenquist:  it’s.

Kristen Berman: It’s a hedonic treadmill. And so in theory we’d want to basically kind of lower that bar. Sadly it’s a group decision. It’s not something that one company could go and say you know what I’m going to be mundane and boring and hope to get people’s attention. And it would need to be kind of all the advertisers would say hey guys let’s take it down a notch. This whole like croc shoe thing probably too much of an investment to get a click.

Kevin Rosenquist: So we get enough clicks.

Kevin Rosenquist: I guess the investment is worth it h?

Kristen Berman: Yeah I mean that. Yeah that’s. And you know it’s a big sale. Porsche has a good LTV.

Kevin Rosenquist: Yeah. Yeah. Yeah. They’ve I feel like they could afford it. You know they could afford the croc car. Yeah I want to I want to talk a little briefly about nudge theory. For those listening who are unfamiliar it’s a concept in behavioral economics and psychology that proposes subtle interventions or changes in the environment can influence people’s behavior and decision making in a predictable way. Obviously I’m reading this without restricting their freedom of choice. Theory was popularized by Richard Thaler and Cass Sunstein in their 2008 book Nudge Improving Decisions About Health, Wealth and Happiness. So an example that’s easy to conceptualize is arranging healthier foods at eye level in a cafeteria to encourage healthier eating habits. People are still making a choice but feel like there’s freedom in that choice. They’re still subtly being encouraged to make a certain decision. Is that still an effective approach in 2024?

Kevin Rosenquist: Yeah if.

Kristen Berman: It’s the right behavior you’re trying to change. So basically a lot of any design that you’re looking for is around. Is that the behavior people that you should be focused on? So I think in general sometimes we’re so interested in the sexy psychologies like how to do something that we forget that the most important thing is the behavior. I’ll give you two examples of nudges our team did and then we can go back to the eating example. So we worked with Kiva which is a micro lender and people were dropping out of the borrower flow. And the borrower flow is free money like people who are applying for these loans are literally getting free money. These are kind of grant based things. And yet folks weren’t completing the loan. And so again kind of this is classic nudge which is like intention action gap. People want to do the thing and yet they’re not doing it. And so our team basically said how would we help people do this. And so we worked with Kiva and we added a deadline and we added a deadline that says look if you do it by this date you can move to the front of the line. So we weren’t taking away access. We weren’t denying access at all. But we’re giving people what we say is a reason to do this today. And this increase their conversion by around 26%. They then by the way added a second deadline. So it was like there was two deadlines in the email and I thought it was confusing but it further increased the conversion. You know this is giving people a reason to do something today. Look there’s lots of things we could do in the world. And sometimes the things like banking and financial management.

Kristen Berman: All these things just like are not the most fun. You know what’s fun? Netflix. Netflix is fun. Like so it is. That’s present bias right? So like the idea that these financial companies need to give people a reason to do something today. And this giving a deadline is a nudge without taking away anyone’s freedom. And so then another experiment we did was with digit which was acquired by opportune is a basic kind of like smart I would say one of the first kind of AI machine learning companies that would you’d start saving and it would only take as much as you could based on your future prediction of your future expenses and income. And so what we did then is worked with them to say tax time is coming up. Tax time is the biggest refund. That or the biggest windfall that people have in the US typically. Could we get people to save a little bit of it beforehand. And so we did an experiment where we asked people at different times how much they wanted to save. And it turns out that when you ask people before they get their refund counter-intuitively because they don’t know what the refund is going to be  versus at the point they’ve already gotten the refund deposited that we almost doubled the amount of people that saved. And so that one is that one nudge is just to ask like if I say you know McDonald’s drive through do you want fries with that? Like that’s a nudge. They’re calling attention to the idea that they sell fries. You know they sell fries. But by calling attention to that, that drives our attention to a different place. And all of a.

Kevin Rosenquist: Suddenly I’m thinking about the salty deliciousness of those fries. Yeah. Like yeah. Why not? I’m here you know?

Kristen Berman: Yeah. And so even in a classic drop down that a fintech would have asking for your industry the things on top people click on more than the things on bottom. If you move things on top more people will click on that. That’s kind of like the eye level of a supermarket. So what we don’t want to say is that nudges. It’s not like nudges can solve the world. It’s like they are solving a one time behavior. So the idea that I am going to now save for tax time and save part of my refund by the way people kept it in the account 80% kept it in over three months is a real it’s a one time decision and that’s kind of the famous like automatic retirement savings is like you’re making a one time decision that affects your future self. Is this going to get me to work out all the time and eat well tomorrow and save money tomorrow? But it does affect my decision making in the moment. If it’s done if it’s done right. The other thing is it doesn’t necessarily always affect follow on decisions. So there’s a kind of a classic example. If you can get someone to take a carrot but can you get them to eat the carrot. It’s like maybe not like like we all know carrots taste like carrots. Don’t taste that great.

Kevin Rosenquist: You’re fine.

Kristen Berman: You can incentivize me to take it but you may not get me to eat it. But the. But that’s kind of like classic funnel management too. Like I can get someone to click on a link in a marketing landing page. Doesn’t mean if I don’t change the pricing page that I can get them over the pricing page. And so each part of the funnel, each part of our behavior change needs some sort of understanding of the psychology that’s driving me in order to get me to do something different.

Kevin Rosenquist: I was going to ask because we talked via email that you work with fintech companies applying behavioral science and principles to help them better design products which we were just talking about. Aside from nudging them what what other ways do you find as effective with fintech companies to help conversions and influence user behavior?

Kristen Berman: Yeah I mean a lot of this is just the understanding the context what financial product is is on offer at the point that somebody would sign up for it. So classically we kind of or our team uses a model called the three B’s which we’ve kind of generally talked about now which is we’ve reduced the barrier to something. We’re going to increase the benefit to something to get them to do the behavior. And so when you’re talking about any sort of kind of financial management opportunity whether it be expense tracking for an SMB or whether it be Shopify trying to get you to do more payments through their platform or chime trying to get you to use their banking. We’re really assessing that environment and trying to understand how do you fundamentally change the economics the economy like the bears and the benefits? We need barriers to be lower and benefits to be higher. Such a simple equation. But this is how most of the world works is that you are particularly you know chime kind of famously has led with get my paycheck two days earlier. And turns out it was hard for banks to compete with that. You know soon everyone else is following scope. But that’s a real immediate benefit that you’re giving people and it’s going to get you over the status quo. And status quo is so hard. We do the same thing that we did yesterday always you know you can show people how much overdraft fees they have but they’re not going to change banks. And so we really need to kind of as a financial kind of community figure out what is going to get people out of the status quo because it is hard work. Your barriers are so high and you can kind of argue that’s maybe why Dave took off like Dave was giving people these you know $20 loans $200 loans without any real approval. But you know the spot me kind of type features and free money is a really good benefit. And I think a lot of fintech has lost to expense management because you’ve got this like loan features that have come up.

Kevin Rosenquist: Going back to marketing I have a love hate relationship with social media but my background is in marketing so I kind of have to understand the importance of a social media presence. But man there’s a lot of negatives. And as the father of a three year old I’m terrified to see what being a teenager will look like for him. Maybe it’ll be better, who knows? But he’s behavioral science and what you guys do a good fit for social media marketing and strategy? Or is it? Not really.

Kristen Berman: We don’t do a lot of interventions on social media. A lot of you know on social media people are  people are pretty focused on the scroll. And so when we have done advertising when we’ve done kind of non-organic work it costs a lot of money to get people out of the scroll and the most likely time you’ll do that is with something like clothes or something that’s hedonic. Hedonic means kind of like fun and interesting and it is difficult to do that with a financial product where you are trying to get someone in a very different mindset than they are right now. And so we really do hesitate with that type of kind of advertising. Now the counter to this is like Mr. Money Mustache is amazing and has and the fire movement is amazing. And it has basically created new norms new language for people to interact with. Now I don’t know if that started on social media or not but it is a maybe it started on Reddit but it’s like it’s a phenomenon. On giving people language to describe not consumerism but to describe you know like how they’re going to manage their investments and how they’re going to do spending. And so I do think we need more templates more language more norms around financial products. And that may not come with social media but that may come with like you know figureheads Suze Orman and Dave Ramsey and all these people that actually are like quite like that’s that’s a long time ago. But they consistently have content comes out that people can actually follow and and really build into their lives. And NerdWallet giving people comparisons Credit Karma giving people comparisons. It’s like we actually need these types of decision aids because finance is very difficult. I’m skeptical comes on social media is my.

Kevin Rosenquist: I think that.

Kevin Rosenquist: Makes sense to me. So when you sit down and do an intervention with a company a fintech company like what is the first kind of the first starting jumping off point that you that you.

Kristen Berman: Yeah we basically ask for all their data. So you know we say we study what people do not what they say.  we’ll also ask for all of your qualitative interviews or any kind of things that you have but that’s around attitudes preferences and beliefs. And so we’re actually looking for what do people do currently in your ecosystem. And if you haven’t built the product yet that’s okay. We would then go and kind of try to collect. Well if we’re trying to get someone to do something different you know engage with a debit card or something like this what is the ecosystem around that and.

Kevin Rosenquist: Leading them there or attempting to lead them there?

Kristen Berman: Yeah. And we basically say it’s a behavioral diagnosis. And this behavioral diagnosis is like if you have an existing product it’s a 200 page deck of every single screenshot. You know it’s it’s a really detailed like we say we’re little hackers and we’re going in to try to find the point that we can break to figure out kind of like where can we intervene to get someone to do something different because you know again doing something different is very difficult. And so you know we’re looking we get their data we think about what people are currently doing. And then we really come up with this model these theories of change and the psychologies that are impacting us. And so you can think.

Kevin Rosenquist: About with.

Kristen Berman: Finances it could be information aversion It could be procrastination. It’s a lot of times it’s that procrastination could be norms that you think is the right way to do something. It could be that you know if you’re a middle manager trying to convince your boss to get a new product like this idea of agency bias is real. I’m making a decision on behalf of somebody else. How do I justify it? So we think about all the ways that you could be impacting someone’s decision making. And then we’re designing interventions based on those for.

Kevin Rosenquist: For the company.

Kevin Rosenquist: Our most companies decent or are there a lot of them that are absolute disasters when it comes to the user experience and the flow and all that?

Kristen Berman: Yeah I mean I think most are good intent. So I think we have kind of a you know many times people think companies are out to get us. And I.

Kevin Rosenquist: Think.

Kristen Berman: Most of the time they have good people working for them and maybe bad incentives. But in general I still don’t think that these folks are like I’m gonna if you were to look go into Google and try to understand how people cross-functionally work like there’s just very low likelihood that the YouTube team is able to get a meeting with the apps team is able to get them like these are I don’t know  you know we worked with Google for about three years and their behavioral science group really love them but it’s a big company. Yeah. And  yeah. So when we’re talking about our company’s good or not there’s just a lot of constraints they have. And so when you’re looking at it with fresh eyes and first principles you can see like this is not going to get to the business or conser objective that you that you want. And you have the design team the legal team everyone’s trying to like get their $0.02 in and then you get to an experience that is just less interesting. And if you have an exact come down and say something and then the whole team changes. And so we don’t again blame the people. It’s like the system that these companies are operating on to build products is very difficult to actually get to like the cleanest thing. I think you know we Amazon would be an example of like they actually are very focused on the end user experience. And you get something like a one click checkout because they know people want it. This is obviously bad for our wallets but .

Kevin Rosenquist: Terrible bro.

Kevin Rosenquist: I bought so many things that way that I’m like why? Why? What was I.

Kevin Rosenquist: Doing? Terrible for her wallet.

Kevin Rosenquist: Drinking margaritas and shopping.

Kevin Rosenquist: But they’re very.

Kristen Berman: Focused on the experience of consumers. They’re not as much like attitudes preferences and beliefs. They’re like what is the experience that people are having? And and I think companies could do more being this kind of like doing these behavioral diagnosis where we’re trying to really measure the exact every single step someone has to take. And that’s great because it means that like if you can fix the you don’t have to change someone’s mind to like your product. Like that’s kind of our main thing is like there’s a lot of people could like your product but it’s hard to get to. And and so that’s just a harder equation you’re gonna have to deal with. And  the the analogy is like I can ask you if you like apples but if they’re not cut up you may not take it. And so you know you can ask your company like are you do you have cut up apples or whole apples? It’s like the apple hasn’t changed. We just have to figure out how to how to present the apples so people like it Yeah.

Kevin Rosenquist: Make the apple sexy.

Kristen Berman: Yes exactly.

Kevin Rosenquist: All right. We’ve been talking for about 35 minutes now. Final question. Based on my behavior thus far what am I thinking about right now?

Kevin Rosenquist: Yeah.

Kristen Berman: I think the next question but maybe not because we’re at the end so. No it’s been it’s been very lovely I would imagine.  I would imagine you’re thinking about how to get listeners to review five stars on we’re all we’re all more hungry than when we started. So I’ll take the hit for adding 100 calories to everyone’s day.

Kevin Rosenquist: Why not?

Kevin Rosenquist: At least? . All right. Well Kristen thank you so much for being here. I really appreciate it. And it was a great conversation.

Kristen Berman: Great. Thank you so much for having me.