I read it a while ago, but now I’m finding more opportunities to apply its advice. I find it especially practical when it comes to generating greater engagement with banking customers.
Óscar Barba
Co-founder & CTO of Coinscrap Finance
Atomic habits can help people improve their financial situation.
The book promotes micro-changes that, when repeated consistently, have a significant long-term impact. Our brain analyzes, categorizes, and processes information from experiences. Over time, this process triggers automatic responses: habits.
The idea James develops over 336 pages is how small changes can transform our lives. It’s about understanding how habits work and making them serve our interests. As I mentioned, this can serve as a foundation to improve the relationship between banks and customers. Let’s see how!
How do banks teach us to “train” our financial muscle?
According to experts, habits arise because our minds continuously look for new ways to do things with less effort. All routines become habits, allowing the brain to rest more frequently. Once motivations are understood, we can grasp how habits function:
Financial health and the “Four Laws of Behavior Change”
As the author states, every habit consists of four stages: cue, craving, response, and reward. The cue is a stimulus that draws attention to a potential reward. The process also involves craving and response. Let’s see how these apply to personal financial management:
💡 James Clear said…
“If you’re having trouble changing your habits, the problem isn’t you. The problem is your system.
Cue: Make it obvious with a 360º view of the financial situation
Placing visible reminders to reinforce the habit you want to build is the first step. In his book, James recommends placing your running shoes in a visible spot to make it easier to start exercising.
How can the “cue” concept be applied to finances?
In financial terms, tracking your money is necessary to change habits that harm your balance. When users know where their money is going, they can discover ways to spend less and feel motivated to set saving and investing goals.
Categorizing and enriching transactions can help banking users understand their financial habits.
Craving: Make it attractive by hyper-personalizing the experience
Associate the habit with something enjoyable and rewarding, like knowing that if you save €50 every month, you’ll be able to buy a robot vacuum and never vacuum manually again. Sounds great, right?
Banks can use transactional data to uncover their customers’ desires, needs, and financial pain points. How about sending hyper-personalized messages at the right moment?
For example, alerting them to subscriptions that are impacting their balance—those unnoticed small expenses that, if cut, could significantly improve their financial health. By enriching transactions, we can display the companies they’re spending with and the amounts, helping the user regain control over their finances.
Response: Make it easy with automatic saving tools
Clear’s third law tells us to lower barriers that prevent us from adopting a new habit—essentially, making the hard easy. This reminds me of how challenging it can be to start setting aside money and growing it over time.
From my experience, micro-saving is the perfect example for this stage. If people have assistance in their online banking, with intuitive tools that celebrate their progress and reveal new opportunities to increase their savings, success is guaranteed.
This happens when insights are leveraged. Banks can display a banner within the financial assistant when an extra income is received, suggesting a tailored investment product. Alternatively, they can issue a push notification if a duplicate charge is detected, thereby reducing the likelihood of fraudulent activities.
Reward: Make it satisfying with immediate benefits
The author explains that immediate rewards reinforce the habit and sustain it over the long term. How can banks leverage this? By rewarding routine purchases with cashback, for example.
Daily tasks can be transformed into tangible benefits, such as 3% of the amount spent at gas stations being directed to a savings account. “Every action you take is a vote for the person you wish to become,” James reminds us.
This is the case for institutions that help their customers achieve their New Year’s resolutions: If an online banking user’s goal is to start eating healthier, it could be very helpful to instantly identify transactions associated with fast-food restaurants.
Reframing systems allows you to transform your financial habits
We are so used to following our routines that we don’t stop to assess whether what we do truly helps us. This happens to bank users and the institutions themselves. Their systems for addressing problems no longer work.
The advancement of financial technology allows us to refine these systems and make a leap toward better living. Tools based on artificial intelligence and real-time data can create financial products that encourage the development of atomic habits.
The case of Digital Piggy Banks as a fundamental tool for building habits
A clear example of this is what we’re seeing with the users of one of our micro-saving modules. Within days of its launch, this tool already has nearly 3,000 registered users. Of those, 75% have already made contributions to their digital savings pot.
Thanks to this technology, customers’ emergency funds are growing. As shown in the graphic, the average timeframe set to achieve their savings goals is around 10 months. The preferred initial amount to start saving is approximately €3,000, and we’ve already observed an average savings of €400 per person. Not bad, right?
But the figure we’re most proud of is the total amount saved: an impressive €1,523,339.19. In just 1 month! When at Coinscrap Finance we talk about giving users control over their finances, this is what we mean: Offering simple, automated tools that facilitate the creation and maintenance of healthy financial habits.
“Your commitment to the process determines your progress.”
Banks must stay attuned to these dynamics and leverage them to their advantage. Our clients understand that offering smart modules can make a transformative difference for both their users and their brand’s perception in the global market.
The world’s leading banks stand out because they help people achieve their goals. Our developments enable institutions to offer smart tools like “Smart Goals”, modules designed to improve personal financial management.
Let’s consider a use case: when someone receives a charge for home insurance, the tool suggests creating a monthly savings goal to cover that expense for the following year. Automating digital savings pots brings peace of mind and avoids unpleasant surprises!
We often say that a single person can be the transformative agent for a society, group, or bank. A simple decision can transform our entire existence. That’s why we find it so important to apply Clear’s teachings. His words inspire us to continue improving the financial health of the population.
Will you join the change?
About the Autor
Óscar Barba is co-founder and CTO of Coinscrap Finance. He is an expert Scrum Manager with more than 6 years of experience in the collection and semantic analysis of data in the financial sector, classification of bank transactions, deep learning applied to stock market sentiment analysis systems and the measurement of the carbon footprint associated with transactional data.
With extensive experience in the banking and insurance sector, Óscar is finishing his PhD in Information Technology right now. He is an Engineer and Master in Computer Engineering from the University of Vigo and Master in Electronic Commerce from the University of Salamanca. In addition, Scrum Manager and Project Management Certificate from the CNTG, SOA Architecture and Web Services Certificate from the University of Salamanca. He recently obtained the ITIL Fundamentals certification, a recognition of good practices in IT service management.
