Nationwide Prize-linked Savings

• Description of the programme
• The study
• Key findings
• Points to consider

Description of the programme

Prize-linked saving accounts are an innovation which offers people the chance of winning a prize in return for saving money into an account. The prize element is intended to attract customers and encourage a habit of saving by overcoming certain psychological barriers to saving and behavioural biases.

Nationwide Building Society’s Start to Save is a prize-linked saving account which aims to help people who might otherwise struggle to save start a saving habit. The account, which offers attractive interest rates, easy withdrawals and quarterly prize-based incentives for small, regular deposits, was introduced by Nationwide to its customers in 2020 (two years prior to the study). The account required savers to deposit £50 to £100 each month to qualify for a quarterly prize draw to win £200.

The prize element of the Start to Save account was not explicitly advertised as part of Nationwide’s original campaign for the account. Instead, it centred on the message that “It’s easier to save the day you’re paid. Set up a standing order today and start a more successful saving habit”.

The study

The study was commissioned by the Money and Pensions Service to explore and test the most effective ways of designing and communicating prize-linked savings accounts to people who are not saving regularly. It used a mixed-methods approach including a rapid review of existing evidence and six qualitative depth interviews with existing Nationwide customers with a Start to Save account.

The main, quantitative element of the study involved an online lab-based randomised control trial with 4,500, largely younger, participants who were expected to be struggling with their finances. Participants were allocated to a control group who received an advert for a hypothesised saving account based closely on the messaging of the original Nationwide Start to Save offer, or to one of four treatment conditions which varied the advert’s message in a way designed to overcome a specific behavioural bias.

The study, which was undertaken in early 2022, set out to address two main research questions: what are the most effective ways of designing the product to boost saving rates; and what is the best way to communicate the features and benefits of the account to target groups to encourage them to sign up?

Key findings

This study reports differences that are statistically significant where p<.05.

• Condition design: a control condition which adopted the original message Nationwide had used to advertise their account which centred on a prompt to save at a good time (i.e. payday), plus four behavioural bias treatment conditions:
  • present bias (in which people tend to place higher value on immediate rewards while undervaluing future rewards)
  • framing effect (in which decisions are influenced by the way information is presented);
  • reciprocity and endowment effect (in which people feel obligated to repay gifts, and value items they own more than items they don’t; and
  • messenger effect (in which greater weight is given to messages which come from someone who is relatable)
• Willingness to sign up to the account: The framing message generated more interest than the control group: 31% of people who saw this message expressed interest in signing up compared with 26% in the control group.
• Interest in more information about the account: Three treatment conditions (present bias, 23%; framing effect, 24%; and messenger effect, 25%) generated more participants who clicked for more information about the account when compared with the control group (20%).
• Saving intent: The framing message was more likely to generate intent to save than the control group (35% vs 26%).
• Confidence to save using the account: Three treatment conditions (present bias, 46%; framing effect, 42% ; and reciprocity, 46%) generated more participants who said they were confident they could save enough compared with the control group (32%).
• Other important design features for prize-linked saving accounts: Providing smaller, regular prizes and allowing smaller deposits.

Points to consider

• Methodological strengths/weaknesses: The qualitative interviews were limited to six participants, all female aged between 33 and 47 and who had been Nationwide members before opening a Start to Save account.
• Generalisability/ transferability: The participants of the qualitative interviews were similar demographically and may not be representative of other account holders.
  • The intentional bias towards younger people in the randomised controlled trial suggests that the results should not be generalised to older age groups.
• Relevance: The report is relevant to all stakeholders, academics and policymakers with an interest in savings and saving schemes.
• Applicability: The lab-based design and focus on interest, confidence and intentions rather than actual behaviour means that applicability to actual saving behaviour has not been tested.
  • The trial results related to one specific prize-linked saving account design and may not apply well in all cases to other account designs.