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T(caps)oday, I want to take you on a journey to explore how banking and UPI (Unified Payments Interface) apps might be subtly influencing us to spend more through the principles of behavioural economics. But before we dive into that, let me share the story that inspired this post.

Recently, I was working on a problem statement to prepare a case study for a shared wallet concept for PhonePe. The task seemed simple enough: design an app feature where users can add their family members or friends to a shared wallet. Everyone in that wallet could then pay through it, view, and manage their expenses effectively—all while reducing the hassle of manual calculations and stress.

As someone living in a remote area, I understand how stressful it can be to manage money efficiently, especially when dealing with everyday expenses. I often use apps like money managers, Split wise, or even WhatsApp groups to record my bills, hoping that these tools will help me analyse my spending behaviour later. But let’s be honest—it rarely works out that way. Switching from one app to another just to record and analyse a transaction is tedious, and I usually end up ignoring the whole process.

That’s when the idea of a shared wallet concept took shape in my mind—an app that could do all of this for us. Imagine creating a shared wallet, adding your family, friends, or even colleagues, setting the contribution amount, and then making payments through it. The app would automatically keep track of expenses and offer detailed analytics on spending patterns.

But here’s where things got interesting. When I set out to design this feature, I wanted to include an analytics dashboard—a clear, upfront display of data with graphs, spending reports, and insightful metrics to help users understand their financial behaviour. Surprisingly, when I searched for examples of such analytics in existing banking and UPI apps, I was disappointed to find almost none.

I explored apps like PhonePe, Paytm, Google Pay, Fi, Jupiter, and even traditional banks like SBI. While the neo-banking apps like Jupiter and Fi showed some promise, even they fell short of offering a comprehensive analytics dashboard that truly helps users manage their money effectively.

Why Don’t Banking Apps Provide Better Financial Analytics?

This brings us to the big question: Why don’t we see robust financial analytics in these apps when we know how useful they could be? When I discussed the design concept with my fellow designers, they advised against experimenting with this idea, suggesting that nobody else was doing it for a reason and it might worsen the user experience.

So, I dug deeper to understand why these institutions might be holding back. Here are some possible reasons:

1. Lack of Infrastructure: But this is unlikely, considering that these financial institutions are far from lacking in resources.
2. Bad User Experience: Again, these companies have the expertise to design excellent user experiences, so this reason doesn’t seem convincing either.
3. Behavioural Economics: Now, this is where it gets interesting.

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The Role of Behavioural Economics

Behavioural economics is a field that combines psychology and economics to understand how people make decisions. Unlike traditional economics, which assumes that people are rational decision-makers, behavioural economics recognizes that our choices are often influenced by emotions, biases, and cognitive limitations.

A concept that perfectly illustrates this is the “invisible spending” effect. This phenomenon highlights how the lack of a tangible, physical representation of money in digital transactions can lead to overspending. When you can’t physically see the money leaving your wallet, it’s easier to justify spending more than you would with cash.

Banks and UPI apps might be leveraging this aspect of human psychology to their advantage. By not providing detailed analytics or burying them deep within the app, they make it harder for users to track their spending, encouraging them to spend more without realizing it.

Are They Cheating Us?

The idea that these financial institutions might be using behavioural economics to manipulate our spending habits raises an ethical question: Is it fair for banks to hide our spending data from us in this way? Shouldn’t they be helping us manage our finances better instead of capitalizing on our cognitive biases?

In fact, during my research, I came across numerous articles with headlines like “Banking industry culture fosters cheating” and “Digital Payments Induce Over-Spending” While I won’t be diving into those specifics, the underlying question remains the same—are banks and UPI apps intentionally withholding tools that could help us spend smarter?

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A Call for Transparency

I’ll leave you with this thought: Should banks and UPI apps provide better analytics to genuinely help users manage their finances, or is what they’re doing justified in a business sense? What do you think—are they really cheating us with behavioural economics, or are they simply running their businesses?

Let’s start a conversation in the comments. I’d love to hear your thoughts!

Cheers,
Gyan