CBA app prompts customers on better ways to use their tax refunds

  • By Zilla Efrat

CBA has added a new feature in the CommBank app after its research showed that instant and well-timed digital nudges can affect customers’ decisions on how to allocate money.

As part of its research, CBA’s financial wellbeing team prompted customers who consistently incurred credit card interest to think about how they could best use their annual tax refund.

Along with messages to consider making a credit card repayment, customers also received information about the benefits of reducing their debt, including savings on interest or avoiding late fees.

CBA’s chief data and analytics officer, Dr Andrew McMullan, says these prompts or “digital nudges” helped deliver a shift in customer behaviour. Customers who engaged with the credit card repayment nudge repaid an average of $541 more in the month following their tax refund.

“Behavioural science tells us we view windfall gains, such as our annual tax refund, differently compared to our regular income,” says McMullan.

“We tend to mentally put these funds into a ‘free money’ category which means we’re more likely to spend these funds without considering opportunity costs.”

McMullan says CommBank app’s new feature in the lets customers know in real-time when their tax refund hits their account and provides a targeted message to them to consider how best to use their tax refund to improve their financial wellbeing

The feature is driven by the bank’s customer engagement engine, using artificial intelligence, machine learning and insights from customer activity.

“Using our data and decision science expertise, and also powerful customer engagement engine which leverages 157 billion data points across customer interactions every day, we’re able to offer personalised suggestions to encourage customers to think of ways to use their tax refund to work towards their financial goals, as soon as the refund hits their account,” says McMullan.

The new feature was first trialled last year, with more than one million customers sent digital prompts to encourage them to consider saving some of their tax refund or, where more relevant, make a credit card repayment.

“The trial showed that if the credit card nudge was rolled out to all eligible customers, this would result in more than $4 million in ‘catch-up’ credit card repayments each year,” says McMullan.

“And when you consider the average tax refund is approximately $2,400, it is clear that tax time provides an ideal opportunity for many Australians to accelerate their financial goals – whether that is getting back on track with their debts, saving for a rainy day, or investing.”