Raúl Montalvo, director of EGADE Business School, Guadalajara site, analyzes the impact of behavioral economics on financial decisions.

By JOSÉ ÁNGEL DE LA PAZ | EGADE BUSINESS SCHOOL

At the No Money Forum: the Transformation of Cash, organized by the newspaper El País, Raúl Montalvo, director of EGADE Business School, Guadalajara site, participated in the panel "Behavioral economics: What do we base our financial decisions on?". 

Moderated by Sonia Corona, chief writer with El País in Mexico, the panel gathered together behavioral economics experts, including Diana Hernández, director of Operations at the Mexican Institute of Behavioral Economics, and Julián Rincón, Behavioral Economics Leader at BBVA in Mexico.

In his presentation, Montalvo explained how behavioral economics allows companies to use nudge strategies to induce certain consumer decisions. 

He explained that modern technology enables "a hyper-personalization that makes it possible to understand and classify consumer habits, adjusting the offering and messages according to each customer's profile."

Montalvo stated that behavioral economics focuses on people's biases and heuristics, helping companies optimize their customer experience. He stressed the importance of maintaining an ethical framework that avoids manipulating consumers excessively.

Hernández delved into the concept of biases and heuristics, highlighting how these behavioral patterns influence daily and financial decisions.

The expert mentioned that behavioral economics has shown that consumers tend to imitate the decisions made by people in similar contexts, a phenomenon she called "social norms." 

According to Hernández, companies can use these patterns to create more effective, customer-oriented marketing strategies.

Rincón then addressed the challenges of encouraging savings in resource scarcity and financial stress. 

He highlighted how BBVA has implemented behavioral economics practices in its collection area to understand debtors' situations better and offer alternatives to help them manage their financial circumstances. 

The expert explained how these practices have improved BBVA's customer relations, emphasizing that "connecting with and understanding customers is crucial for building a healthy financial relationship."

Montalvo also explained the "empathy gap" and its impact on financial decisions. 

He affirmed that "in stressful situations, people tend to make impulsive decisions that do not always reflect their long-term interests."

Consequently, he underlined the need to create support mechanisms that guide consumers in making informed decisions, particularly in contexts of economic uncertainty. 

The No Money Forum: the Transformation of Cash also dealt with subjects such as the evolution of financial services in the digital era, the impact of technology and artificial intelligence on the sector, the transformation of cash, Open Finance, and the rise of future unicorns.