Setting defaults for online banking transactions: Experimental evidence from personal loan repayment terms
As more people use online tools to assist financial decision-making, it is important to understand how the design of these tools influences consumers’ choices. We conducted an experiment (N=180) using a simulated product comparison tool for personal loans, which tested whether choices were affected by the default settings for properties of the loan. The results show that changing the default repayment term from 1 year to 5 years led to 12%–16% more consumers choosing a repayment term of 4 years or longer, which would cost each of them a minimum of €470 on a €10,000 loan. These findings imply that subtle presentational features of online tools may have systematic effects on important financial decisions.