How Decision Science Combines Behavioral and Data Literacy For Wellbeing

April marked Financial Literacy Month, while May is Mental Health Awareness Month. This timely coincidence presents an opportunity to explore how businesses, especially in the banking industry, can leverage decision science to promote both financial and mental resilience for their customers, while boosting engagement and loyalty. Leveraging decision science effectively requires not only advanced analytics but also a strong foundation of data literacy across the organization.

In recent Gartner research I co-authored, we explored why understanding human decision-making is vital for businesses across sectors to remain competitive, with a focus on banking.

The key insight: consumers' choices are often swayed by behavioral biases, not just logic. This principle extends beyond finance - companies in retail, healthcare, technology, and other industries can leverage behavioral science to craft customer-centric solutions.

By fusing data science's analytical rigor with behavioral insights into customer psychology, businesses are unlocking new levels of engagement and growth in 2024.

~ David Pidsley, Senior Director - Research, Analytics and AI, Gartner

While banking provides a compelling case study, the larger takeaway is that decision science is a transformative framework for any business looking to design experiences that resonate with customers' natural decision-making processes and emotional drivers.

Decision Science is Combining Data and Behavioral Science to Drive Customer Engagement

Decision science is a powerful approach that integrates two critical fields: behavioral science (BeSci) and data science.

While data science excels at uncovering patterns in customer behavior, it often fails to explain the underlying psychological drivers of those actions. Behavioral science fills this gap by illuminating the "why" behind the "what," providing a deeper understanding of customer decision-making.

Is There a Trust and Engagement Crisis in Banking?

Decision science offers a comprehensive toolkit for banks to tackle the trust and engagement crisis they face, despite having access to vast customer data. Several factors contribute to this crisis:

●????? Cognitively taxing products with complex terms and jargon

●????? Lack of transparency around fees and charges

●????? Generic solutions that ignore individual needs and contexts

Decision science empowers banks to overcome these barriers by leveraging both data-driven insights and behavioral principles to shape offerings that align with customers' natural decision-making processes. This involves applying proven BeSci concepts such as loss aversion, default options, social proof, and choice architecture to guide customers towards better financial decisions and experiences.

Create Customer-Focused Solutions with Decision Science

When banks integrate BeSci into their data science and analytics teams, they can create solutions that are:

●????? Intuitive and easy to understand, minimizing cognitive strain

●????? Completely transparent about terms and fees, building trust

●????? Highly personalized to customers' individual financial and psychological profiles

Cultivating data literacy is essential for organizations seeking to harness the full potential of decision science. When teams can effectively interpret and communicate data-driven insights, they can better collaborate with behavioral scientists to design impactful, customer-centric solutions. Data literacy also enables organizations to bridge the gap between technical expertise and strategic decision-making, ensuring that insights are not only analytically sound but also aligned with business objectives.

Decision science shifts the focus from simply adding features to addressing the core psychological needs that drive customer behavior. By marrying rich customer data with behavioral understanding, banks can craft digital interactions that mirror customers' mental models and resonate on an emotional level. This fusion of data and psychology is the key to driving genuine engagement and business results.

Data Leaders Will Embrace Decision Science

The potential of decision science is immense. Gartner predicts that by 2026, 20% of top data science teams will have rebranded as cognitive science or science consultancies, increasing diversity in staff skills by 800%. Forward-thinking organizations should consider hiring behavioral scientists to get more value from their data.

As you reflect during this season spotlighting financial literacy and mental health, I encourage you to explore the full research to learn how combining BeSci and data analytics can benefit both your business and your customers' wellbeing.

The time is ripe to align your strategies towards these twin goals. Gartner clients can read our complete research here to gain in-depth insights and actionable guidance for your organization:

Maximize Competitiveness in Banking With Behavioral and Data Science

Lead by Gabriela Vogel , with myself David Pidsley and our colleagues Jasleen Sindhu , Mary Mesaglio , Cristina Lazaro , Apoorva Chhabra .

?#DecisionScience #BehavioralScience #DataLiteracy

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Disclaimer: I am using this medium as an opportunity to test ideas and move research forward. Because the content I posted here does not undergo our standard editorial review, all comments or opinions expressed hereunder are mine and do not represent the views of Gartner, Inc., its subsidiaries or its management.