Subtle features of online banking tools can sway consumer choices

August 14, 2019

Consumers buying financial products can be swayed by subtle features of online calculators and search tools, according to new research from the ESRI’s Behavioural Research Unit. The study, undertaken in collaboration with the Competition and Consumer Protection Commission (CCPC), used a behavioural experiment to show that initial settings of a loan calculator and search tool altered the length of the loans selected by some consumers.

Research in behavioural economics has shown that decision makers in many walks of life are drawn towards default options – those they see first or must depart from when making a decision. The ESRI study is the first research to show that this effect applies when using online tools to pick financial products.  

The experiment involved choosing personal loans. As well as the interest rate, the repayment term of a loan has a large effect on the cost to consumers. For instance, repaying a €10,000 loan over 1 year costs about €500 in interest, while repaying it over 5 costs more like €2,500. In the ESRI experiment, the length of loan that consumers chose depended on the default settings of the online calculator they used.

The experiment asked a representative sample of consumers to choose a personal loan using an online calculator and search tool, just like those now widely used in online banking. Half of the consumers were randomly selected to see the initial repayment term set at 5 years, while the other half saw it set at 1 year. On average, the decisions of consumers who saw the longer default of 5 years were swayed towards longer loan terms. This effect happened despite consumers changing the default setting to search other options.

 “As online banking becomes more popular, our findings suggest that consumers should be wary of how their choices can be influenced”, said Dr Shane Timmons, member of the ESRI’s Behavioural Research Unit and lead researcher on the study. “In our experiment some consumers selected loans that would ultimately cost them at least €500 more, simply because the calculator first showed them a 5-year repayment term.”

Commenting on the significance of the research, Áine Carroll, Director of Communications and Policy at the Competition and Consumer Protection Commission said, “Our financial product comparison tools allow consumers to compare current and savings accounts, credit cards, loans and mortgages in the market. Unsurprisingly, these are the most visited pages of the CCPC’s website. As demonstrated by this research, consumers may unknowingly make decisions which could cost them more in the long run based on how information is presented. In commissioning this research, we wanted to get valuable insight into how best to deliver our information to ensure that consumers are making informed financial decisions, based on an independent presentation of their options. ”

The study demonstrates that small, unnoticed features of online environments can have important influences on our decisions.

The authors recommended that consumers visit the Competition and Consumer Protection Commission’s website,, for advice before choosing financial products.