Banking UX

Neuroscience, fintech, and breaking bad money habits

Neuroscience, fintech, and breaking bad money habits. Image: Enzo Varriale
Written by Jessica Ellerm

Neuroeconomics and neuroscience are in their infancy, yet the science behind it could help us manage our money better. Story by Jessica Ellerm.

Why do we do the things we do, and why do we behave the way we behave? For many of us, the quest to understand ourselves and our actions continues till the day we die. And while many of us seek to uncover who we are through relationships, religion and work, how often do we struggle to identify those actions we should take to break our bad habits once and for all, and change ourselves for the better?

More often than not, we resign ourselves to our ‘fate’, our genes and the quirks of our character. This plays out every day in the way we manage our relationships with friends, colleagues and loved ones, our health and our eating habits, and our attitudes towards money and short-term rewards. While the world around us has marched forward at a staggering pace, our relatively primeval brains haven’t. We’re wired for short-term survival, not necessarily long-term success. Spend now, save later is a catch-cry for a reason.

But what if I told you that, despite this, and the genetic handicap* you possibly were handed by your ancestors, that by altering your brain chemistry, you could change the way your neural pathways fire up, so that going to the gym gave you the same high as eating chocolate, and saving money felt better than spending it?


A field called neuroeconomics, a close relation of neuroscience, hopes to help us do exactly that when it comes to money. Uncovering exactly what environmental triggers cause neural pathways to fire, and what chemical reactions then take place in the brain, could enable us to learn how to override our faulty programming and behave better when it comes to our finances.

Is it time for fintech startups to head into the lab?
Similar to a prescription of antidepressants today, in the future we may be heading to the chemist to fill a script of anti-spending. Laugh all you want, similar research into the science of love has led to compounds such as oxytocin, a pivotal chemical in enhancing social bonding, now being available for (dubious) sale to ‘enhance your dating life’. The future is now, people.

Understanding a few fundamental concepts of neuroeconomics in order to positively and ethically tap into our reward mechanisms could become a serious advantage in the financial services space. Is it time for fintech startups to head into the lab? Below, I cover two areas that may be worth experimenting with.

Irrational exuberance vs irrational pessimism – testosterone vs cortisol

Maintaining a healthy approach to how you appraise risk when investing is critical to keeping a level head in the bull and bear markets. Research has uncovered that extremes of two hormones, testosterone and cortisol, triggered in our bodies by environmental factors such as stock market bubbles and crashes, can desensitize a trader to critical information necessary to make an informed investment decision.

So, how could this knowledge be leveraged to overcome our neural inadequacies? Well, similar to how a diabetic checks their blood glucose levels throughout the day, could investors track their hormones before trading using a simple wearable device? The ‘fitbit’ for investors, perhaps? Or, based on our perspiration levels, could an Apple Watch notification warn us that we’re heading into dangerous fight-or-flight behavioral territory, before we pushed buy or sell? Understanding what drives our urges can help us control and moderate them. Knowledge, after all, is power.

The chemical of trust: oxytocin

Often in life, we’ll devise catchphrases that help us rationalize the complex world around us. One such idiom you’ll often hear in business, especially relationship management and sales, is that of the ‘trust bank’. To gain the trust of your clients, colleagues and peers, you’re advised to regularly make deposits in the form of acts of goodwill into their trust bank. The idea is that at some point in the future, the goodwill will be returned thanks to the principles of reciprocity and indebtedness.

Turns out the catchphrase is on the money after all, with research showing that trust does indeed build trust, thanks to the inducement of a molecule called oxytocin during these exchanges. Studies have shown a direct correlation between increased oxytocin and increased trust levels between individuals and groups.

When we go online, our blood oxytocin levels elevate
So, how can a startup put this into practice? Well, given that trust is the center of any financial exchange, elevating oxytocin levels in the lead-up to (and during) the transaction would be key. This could be through leveraging social media – yes, when we go online, our blood oxytocin levels elevate. Or just regularly depositing in a prospective customer’s trust bank – part of the science behind good content marketing.

But what about more extreme ideas? Well, inhaling synthetic oxytocin could have an immediate effect on your saving habits, with studies showing it increases the likelihood you’ll opt for delayed gratification rather than spending today. Nasal sprays with your savings account, anyone? While other ways to boost oxytocin probably aren’t as palatable in a B2C or B2B world (free hugs, 15-minute massages), something like a simple savings coach application that rewards you for reaching your goals, or sends you affirmational messages, could trigger oxytocin creation.

Neuroeconomics and neuroscience are in their infancy, but what’s so exciting is that through these fields of study, we may finally get the opportunity to not only understand what it is that drives our good and bad behaviors, but then equip ourselves with a toolkit so as to do something about them. The good news is we can change at any age; our brains’ malleability (or plasticity) continues well beyond our youth. Now all we have to do is identify the secret chemical ingredients that will allow us to remould it.

* Yes, sadly it’s true. Researchers now believe approximately 30-45% of financial behavior is passed from generation to generation. Yet another thing to blame your parents for, along with blowing your inheritance.

– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. You can read the original article here. Image: Enzo Varriale, CC0

About the author

Jessica Ellerm

Jessica Ellerm is CEO and co-founder at Australian fintech startup Zuper Superannuation. She's also a fintech commentator, blogging at her own website ( and guest posting for BankNXT. In addition, she writes for the fintech blog Daily Fintech Advisers, specialising in small business banking. Prior to Zuper, Jessica spent 6+ years at payments company and small business startup bank Tyro. Jessica is a contributor to Brett King's Breaking Banks, and has freelanced as a finance news journalist for Australia's leading online markets channel Finance News Network.

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