CBA nudges Australians to make most of their tax returns

New research from Commonwealth Bank shows customers who engaged with a real-time digital savings nudge after receiving their 2021 tax refund increased their net savings an average of $650.

Ben Grauer, CBA’s Head of Financial Wellbeing, estimated when the savings nudge is rolled out to all eligible customers this year, this will result in more than $360 million in ‘catch-up’ savings.

Grauer said: “Despite best intentions to save, household under-saving for financial shocks is endemic in Australia. More than one in three Aussies say they couldn’t handle a major unexpected expense and have limited cash flow.1 It’s important households have a savings buffer to help manage any volatility in their income and expenses. Research suggests lack of savings can lead to reduced feelings of financial wellbeing, life satisfaction, happiness, and security.2

“This next tax season, CommBank plans to use its AI-powered Customer Engagement Engine to nudge customers to make the most out of their tax refund by encouraging them to consider using these funds to save, pay down some of their credit card, or pay off other obligations.”

Will Mailer, Chief Behavioural Economist, said: “Behavioural science helps us to better understand how people think and behave around different money moments, and design experiences to support them to reach their financial goals faster. Although a return is effectively just part of our regular income coming back to us, the fact that it arrives in a single payment, outside of our budget cycles, with a different label and source, means we put different mental rules around it and spend it in ways we otherwise might not,” Mr Mailer said.

“Our 2021 results show that by contacting customers ahead of time, we can help them to plan ahead and more carefully consider how much of their returns they would want to allocate towards their financial goals.”

This year CommBank’s pre-tax refund experience focuses on helping customers with savings accounts to pre-commit to saving their tax refund. In Netbank, customers will be prompted to check which account their Australian Tax Office refund will be credited into, to help maximise savings.

Customers who receive their tax refund into a transaction account will receive a message encouraging them to consider what they can use it for, including reducing debt, saving it, or using it to pay upcoming expenses.

With CommBank research showing almost a quarter of Australians (23 per cent) are unsure of that they want to do with their tax return, the bank encourages customers to look out for the tax time feature in the CommBank app and consider ways to make the most of their 2022 tax refund.

Another study from Commonwealth Bank has revealed the majority of Australians (64 per cent) plan to put their 2022 tax return into savings or use it to pay off debt, as cost of living pressures curb household spending behaviours. According to the research, this year Australians expect to receive an average of $2,616.

Despite restrictions on international travel lifting, only one in five Australians (18 per cent) say they plan to put their tax return towards a holiday, and the same proportion (20 per cent) say they will use their tax return for general spending.

“Australians are concerned about the impact of external pressures on their finances and are responding sensibly by building savings buffers and curbing their spending,” Mr Grauer said.

“Tax time is a really great opportunity for Australians to put aside some rainy day funds and get themselves ready to weather future economic shocks. It’s positive to see that so many Australians are planning to use their 2022 tax refund to help prepare them for potential impacts to their finances.”

About the research

The CBA randomised field trial was conducted with 49,981 customers during last year’s tax season (July 1st to November 30 2021) to answer the question of whether a salient savings reminder increases the savings rate of windfalls. The nudge was sent soon after the customer received their tax refund. The nudge helped customers in the treatment condition save on average $122, or $650 for only those customers that engaged with the nudge, 14 days afters after the refund. At scale this would grow net savings by $360m, assuming 2.95 million people received a refund during the tax season.

The survey was conducted by the House of Brand Group, with fieldwork conducted between 16/04/2022-21/04/2022, amongst a sample of n= 999 nationally representative respondents with quotas set on age, gender and location.

1 CommBank, Measuring Financial Wellbeing, 2018, “Using survey banking data to measure financial wellbeing

2 Rubertons at al, 2016, “How Your Bank Balance Buys Happiness: The Importance of “Cash on Hand” to Life Satisfaction. Emotion.”


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