by Ethan Drigotas, Director, Business Development & Growth Operations, Mad*Pow
Credit: anilyanik Creative #:1140146852
If you’re paying even minor attention to the U.S. financial news cycle (or your 401k for that matter), you’ve noticed that the world is facing some serious economic uncertainty. Not only is your investment rate of return likely plummeting, but you’re hearing “downturn” and “recession” everywhere you look. If you’re like me, you’ve worried a bit and you may have tried to do some research to understand where we might be going and why - and if there’s anything we can do to stop the decline.
My doom scrolling (and the general internet rabbit hole) led me to a recent article from NPR’s Planet Money, Fear the Vibe Shift: Are We Entering a Recession?. The article proposes a few reasons why the U.S. economy might be heading into recession territory, including production and supply chain challenges, government economic mismanagement, and the far-reaching impact of conflicts in Europe.
There is, however, another proposed reason for an economic downturn - us.
Planet Money introduces the theories of John Maynard Keynes, an early 20th century economist:
For Keynes, free markets were riddled with imperfections that could conspire to lower prosperity for everyone. One important imperfection: our "animal spirits." Keynes posited that people aren't perfectly rational, especially in times of distress or panic or tremendous uncertainty — like during and after the stock market crash of 1929. Instead, Keynes said, we often make investing, spending, saving, and many other decisions based on our animal spirits: our feelings, emotions, beliefs, and psychological quirks.
In other words, when we’re in times of distress and confusion (COVID, anyone?) we’re not the rational actors that a marketing textbook makes us out to be. The good news though, is that if the problem is “us”, there’s likely something we can do about it. It starts with thinking about our personal financial touchpoints in a better way, and, as designers of financial experiences, making sure that we’re designing to tame our “animal spirits”.
My doom scrolling (and the general internet rabbit hole) led me to a recent article from NPR’s Planet Money, Fear the Vibe Shift: Are We Entering a Recession?. The article proposes a few reasons why the U.S. economy might be heading into recession territory, including production and supply chain challenges, government economic mismanagement, and the far-reaching impact of conflicts in Europe.
There is, however, another proposed reason for an economic downturn - us.
Planet Money introduces the theories of John Maynard Keynes, an early 20th century economist:
For Keynes, free markets were riddled with imperfections that could conspire to lower prosperity for everyone. One important imperfection: our "animal spirits." Keynes posited that people aren't perfectly rational, especially in times of distress or panic or tremendous uncertainty — like during and after the stock market crash of 1929. Instead, Keynes said, we often make investing, spending, saving, and many other decisions based on our animal spirits: our feelings, emotions, beliefs, and psychological quirks.
In other words, when we’re in times of distress and confusion (COVID, anyone?) we’re not the rational actors that a marketing textbook makes us out to be. The good news though, is that if the problem is “us”, there’s likely something we can do about it. It starts with thinking about our personal financial touchpoints in a better way, and, as designers of financial experiences, making sure that we’re designing to tame our “animal spirits”.
Designing for the “Animal Spirit”
Too many financial experience decisions are made in a boardroom without involving direct feedback and opinions from the potential users and “animal spirits” using the app, website, tool, or physical branch in question.At a corporate level, we’re trained to examine the macroeconomic trends and factors influencing the world around us and we use that information to make business decisions. Those things are important but, in reality, how those trends impact our businesses may have more to do with how they impact the people on the other end of the experiences we offer.
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Do you remember the bank run scene in the classic holiday movie It’s a Wonderful Life? I’m not going to go into the financial details of what led to it, but in the movie, there is A LOT of economic uncertainty for the Building and Loan customers, and their “animal spirits” are running amok. In fact, humans and their “animal spirits” are running to withdraw every penny they have all at once.
I don’t think George Bailey conducted customer research, but he didn’t have to. His customers were his neighbors and he knew them incredibly well. As the head of the bank, he focused on helping them, inspiring confidence, and making sure they didn’t make emotional decisions that would financially harm themselves and others in Bedford Falls. Whether you run a community bank like Bailey or Fortune 500 financial institution - that’s the type of experience your customers deserve.
Experience design backed by real research into the people on the other side of the product is the only way to ensure we’re actually solving the problems that need to be solved and inspiring confidence in our institutions. Understanding our customers, the transactions they want to make, and how money matters can be intensely personal is the key to balancing technology and humanity in times of uncertainty. It’s also not a bad idea to strike that balance when things are stable too.
So, can design thinking prevent the next recession?
I can’t say for sure, but I do know that a seamless and human-centered experience makes me behave more rationally, less prone to emotional decision-making, and gives me confidence that an institution is looking out for me - and maybe even doing some of that worrying so I don’t have to.
Our institutions aren’t perfect, and neither was George Bailey. But like George, we can, and should, strive to create experiences that improve our businesses by supporting the people we serve.
About author
Ethan Drigotas
Director, Business Development & Growth Operations
Mad*Pow
Ethan brings his passion for driving scalable, measurable results to Mad*Pow as the Director of Business Development & Growth Operations. He’s focused on expanding partnerships in the financial services and giving Mad*Pow’s project teams the ability to drive meaningful transformation for end users in the banking, wealth management, and insurance space.
