By Rodrigo Rocha
Psychology and behavioural sciences can help us understand the role our character and personality play in our decision-making processes, especially the choices that impact our financial lives. Understanding the importance of character has been shown to lead to better outcomes in the field of credit and collection for both consumers and financial services providers.
Here are 7 takeaways from the “Behavioural Economics, Psychometrics and Nudging” roundtable at the Ciclo de Riesgo event in Colombia.
Psychometrics essentially it refers to the ability to measure psychological traits. Psychometric assessments can objectively measure and quantify variables such as abilities, skills, knowledge, attitudes or personality traits.
While nudging is intended to encourage positive behaviour or choices by making them easier or more attractive, ‘Sludging’ involves intentionally creating barriers or obstacles to discourage or impede certain behaviours or choices. For example, setting the default selection for the user to obtain the highest rate of insurance that they do not need, or making it unnecessarily difficult to cancel a subscription service.
However, people of the same background can also have vastly different personalities, for example, siblings or members of the same family may grow in the same geographical, cultural, and socio-economic environment but often make very different decisions and have very different personalities as well. All of this can be captured in a psychometric assessment and provide insights into credit risk.
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El acceso a un crédito justo es el acceso a la oportunidad. Los originadores de crédito tienen una enorme responsabilidad a la hora de decidir
Access to fair credit is access to opportunity. Lenders hold enormous responsibility for deciding who has access to that opportunity. This is why credit risk