Improving financial literacy through mobile technology: Small Change pilot program outcomes

About this report

This report presents the outcomes of a pilot financial literacy project launched in Ottawa in November 2015 by United Way Ottawa in collaboration with the Financial Consumer Agency of Canada and with support from a leading financial institution.

This report documents the results of the Small Change pilot program, which ran between November 2015–March 2016. These findings illustrate the overall impact of this pilot program and the effectiveness of using mobile technology projects to strengthen the financial well-being of individuals across Canada.

Introduction

The Small Change program evolved from United Way Ottawa’s desire to create a mobile application with the potential to drive social change. With the emergence of tablets and smartphones serving as the primary mode of communication for most people, United Way Ottawa recognized a tremendous opportunity to leverage mobile technology to educate and engage the public.

In 2014, the Financial Consumer Agency of Canada held a series of public consultations to inform the development of a national financial literacy strategy. These consultations identified the need to reach and engage Canadians where they are at and to coordinate and collaborate efforts with the ultimate vision of strengthening the financial knowledge, confidence and skills of all Canadians.

Through a period of close consultation, United Way Ottawa and the Financial Consumer Agency of Canada determined that a mobile application could be a powerful tool with which to improve financial literacy among users. In speaking with the Financial Consumer Agency of Canada, it became apparent from their research and public consultations that Canadians need encouragement to make saving a part of their financial habits, and to show them that making small changes to their daily spending habits could result in big savings over time.

This idea was supported by behavioural economics research that identified a clear need to develop financial skills and financial confidence in complement to the knowledge-sharing component of financial literacy programming (Social Research and Demonstration Corporation, 2016). In particular, financial confidence was shown to be a strong predictor of financial behaviour. Research also showed that both human influences (e.g., overconfidence) and environmental factors (e.g., how options are presented) have the potential to influence financial decision-making (The World Bank Institute, 2012).

These findings led United Way Ottawa, in collaboration with the Financial Consumer Agency of Canada, to develop a mobile application—Small Change—that would apply key principles of behavioural economics to positively influence consumer behaviour. One such principle is known as nudge theory—a concept in behavioural science that uses positive reinforcement and indirect suggestions to influence motives and decisions.

Launched as part of a pilot program in November 2015, the Small Change application provides users with a simple, fun and free way to get in the habit of saving money and setting financial goals. During the pilot period, Small Change also offered a unique charitable component by incentivizing users of the application to do good for their community.

Timeline

March 2015: Shared Services Canada expresses interest in partnering with United Way Ottawa to develop a mobile application project

April 2015: United Way Ottawa decides to create a financial literacy application, and collaborates with the Financial Consumer Agency of Canada to develop Small Change

November 2015: Small Change is launched by Ottawa Mayor Jim Watson and Financial Literacy Leader, Jane Rooney, during Financial Literacy Month; pilot period begins (with Apple devices)

February 2016: Small Change is available to download (for Android devices)

March 31 2016: Pilot period ends

Overview of the Small Change program

Objectives

The Small Change program was piloted in Ottawa with the primary objective of helping end users make small behavioural changes that lead to financial savings. Other objectives were to raise awareness of the importance of financial literacy using unbiased, non-commercial content and generate funding for financial literacy initiatives provided through community-based organizations in Ottawa.

Target audiences

Small Change is currently available to anyone with an iOS (Apple) or Android mobile device. Although the application is available to everyone, content was initially tailored to three specific groups:

• Recent post-secondary graduates
• Young professionals
• Mid-career professionals

Upon completion of the pilot test period, United Way Ottawa expanded its marketing campaign to focus on additional audience segments, including new Canadians, seniors, first-year undergraduates, and the Indigenous community.

How it works

The Small Change application empowers Canadians to take control of their financial knowledge and goals. It works as follows:

• The Small Change application allows users to set savings goals, such as covering the cost of tuition, making a down payment on a home, or paying down debt.
• It then creates a series of savings challenges that encourage users to make small behavioural changes that will help them achieve their savings goals. These savings challenges align with common day-to-day spending on things like morning coffee, lunch, or transportation.
• Push notifications are used to remind users about these challenges and encourage them to take specific actions to reduce spending. Notifications are also used to update the user on everything from how much money they are saving to how much they can continue to save.
• Each time a user records a positive behaviour, the application tracks the virtual amount being saved and puts it toward their savings goals.
• The application also presents users with financial literacy tips provided by the Financial Consumer Agency of Canada.

Throughout the pilot period, the application created a virtual cycle of saving, giving, and learning. To incentivize users, each tap of the application made during this time resulted in a charitable donation to financial literacy programs in their community. This unique funding model was sponsored by a financial institution, and allowed users to generate $50,000 in donations.

A detailed description of how the application utilizes principles of gamification and nudge theory to influence behavioural changes can be found in Appendix A.

Partners

Although the Small Change application is solely owned by United Way Ottawa, its development represented a collaborative approach to improving financial literacy among Canadians— bringing together partners from the public, private and non-profit sectors. Key collaborators were as follows: 

United Way: United Way Ottawa’s role in the Small Change program was to act as the program manager and convening organization, and to develop and market the application.

Financial Consumer Agency of Canada: The Financial Consumer Agency of Canada contributed subject matter expertise to the project, as well as development guidance and educational content input. It also engaged in joint promotion activities alongside United Way Ottawa.

Shared Services: Shared Services Canada served as a technical advisor in the early stages of development of the Small Change application.

Financial institution: A leading financial institution was the official funding sponsor of the Small Change pilot program.

EBO Financial Education Centre: As a United Way Ottawa partner agency providing financial literacy services, EBO Financial Education Centre was the chosen recipient of the funding contributed by a leading financial institution via United Way Ottawa

Findings

Over the course of the pilot period, the Small Change application proved to be a mutually beneficial resource for all parties involved—from those who worked behind-the-scenes to develop it to those who achieved tangible savings goals by using it, along with many others.

Its success can be measured using both qualitative and quantitative data observed across six key participants: United Way Ottawa, the Financial Consumer Agency of Canada, a private sector funding partner, EBO Financial Education Centre, end users, and the wider community.

Application usage analysis (November 21, 2015–March 31, 2016)

During the Small Change pilot period, the application was available for download for iOS and Android operating systems from the iTunes and Google Play stores respectively. Tracking data for the application was logged between November 21, 2015–March 31, 2016 for iOS, and between March 1, 2016–March 31, 2016 for Android.

The application was actively used by 1,098 people during the pilot period. Over the course of just four months, Small Change users made 1,067 savings acts, for a total of $46,716 in virtual savings during the trial period—averaging more than $10,000 per month.

A more detailed analysis of usage can be found in Appendix B.

Savings goals

Within the application, each user is required to identify a financial goal toward which they wish to accrue savings. Of the 209 different goals specified during the pilot period, the most popular by a wide margin was savings toward vacations. 120 of the application users—more than for all other goals combined—aspired to save funds to travel to a variety of destinations, ranging from Las Vegas to Europe, and for a variety of reasons, including visiting family, educational trips, special occasions like birthdays and weddings, and even a “tattoo vacation.” On average, Small Change users set a goal of $2,760 toward travel and vacation for a total target goal of $331,210.

A breakdown of savings goals can be found in Appendix C.

The single largest goal by monetary value was retirement, with each user targeting an average savings of $335,200; however, it should be noted that only three individuals specified a retirement goal.

Second most popular in terms of both frequency and monetary value was saving for a home, with 18 individuals targeting an average of $12,427 toward either purchasing or renting a new residence.

Interestingly, the two least popular savings goals were educational and charitable donations. Two users targeted an average of $1,000 each toward education, and just two individuals targeted savings of $60 each, or $120 in total for charity.

In terms of how savings were achieved, the most popular savings challenge that was adopted was to forego buying lunches in favour of brown bagging. 184 users brought their own lunch 409 times to allow them to bank $6,481 toward their goals. Similarly, brewing and bringing your own coffee was a popular choice, with 153 users opting for their travel mugs 347 times to save a total of $1,571.

The single largest savings challenge based on monetary value was the “custom” category, with $31,385 in savings recorded. The “custom” category allowed users to identify their own behaviour change challenge (for e.g. using the library instead of renting movies). However, this result is somewhat misleading, as some individuals used this category to record income of at least $1,000 or more from a second job, windfall payments, and other sources. Ten of the 155 savings events in the “custom” category accounted for $29,000 of the total recorded savings, meaning this small number of very high value events skews the total savings amount.

Impact of financial education funding

In March 2016, $50,000 in sponsorship funding was allocated by United Way Ottawa to its community partner, EBO Financial Education Centre—a charitable organization that encourages individuals and their families to achieve financial autonomy through budget counseling. This funding was used to hire an intake worker to enhance the organization’s tax consulting program provided to low-income taxpayers. There was sufficient funding for EBO to offer the tax filing program from March 2016 to December 2017. The results below are broken down into two time periods: 1) March–December 2016 and 2) January–June 2017. The remaining six month period will be reported on in early 2018.

From March 2016–December 2016, the program enabled 536 taxpayers to receive nearly $2 million in income tax and various government benefits and programs. In 2016, 22 volunteer caseworkers filled out 1,253 income tax returns spanning multiple years for the 536 taxpayers.

From January 2017–June 2017, 354 clients were served and 897 tax returns completed. This helped low-income taxpayers to receive a combined total of more than $2 million in income tax savings and various government benefits, such as the Ontario Trillium Benefit, Goods and services tax (GST) credit, Guaranteed Income Supplement, and the Canada Child Benefit.

To date, the program has helped 890 clients, completed 2,150 tax returns, and resulted in approximately $4 million in income tax savings and various government benefits. The program is currently funded until December 2017, and these results are expected to demonstrate further impact.

It is important to note that the tax savings achieved through this program are typically applied toward covering the cost of basic needs. For example, clients accessing the program from March 2016–December 2016 reported that housing represented nearly half of their average annual income, leaving very little for bills or other monthly expenses.

Every day, this hugely vulnerable segment of Canada’s population faces tough choices, like whether to pay for utilities or buy groceries—making these tax benefits and the financial advice provided by organizations like EBO Financial Education Centre all the more crucial.

Between March-December 2016, the program collected the following data related to individual taxation cases. To better understand the clients helped by this program, of the 536 taxpayers served:

• 50% of the clientele are between the ages of 25 and 49 and 42% are 50 and over;
• 52% live on social assistance while 25% live on employment wages;
• 2.6% of the clientele served come from a rural area in the City of Ottawa;
• 69% are single and 22% are either divorced, separated or widowed;
• The average cost of housing was $5,840 per year, representing just under 50% of the average annual income per taxpayer of $12,977.

As a charitable organization that works to curb financial exploitation and indebtedness, EBO Financial Education Centre aims to improve financial literacy for each of the clients it serves. Clients who access the Tax Consulting Service Program are encouraged to take advantage of the various budgeting and financial planning services and resources the organization provides.

Other benefits

This project demonstrates that all sectors have a role to play in strengthening the financial literacy of Canadians. In this case, the benefits can be seen across not only the collaborators, but the end users of the application as well as the community who received the funding and the financial education.

The Financial Consumer Agency of Canada

The Financial Consumer Agency of Canada is committed to helping Canadians gain the knowledge, skills and confidence needed to make responsible financial decisions. To support this aim, the Financial Consumer Agency of Canada believes it is important to provide people across the country with easy access to user-friendly financial planning tools and resources—anytime, anywhere. The Small Change application represents one such effort: a simple but effective way to help Canadians plan and save for the future by leveraging mobile technology to both directly and indirectly improve financial literacy across Canada.

As outlined in the National Strategy for Financial Literacy—Count Me In, Canada, the Financial Consumer Agency of Canada is actively exploring new and innovative ways of enabling Canadians to manage money and debt wisely; plan and save for the future; and prevent and protect against fraud and financial abuse. Small Change enabled the Financial Consumer Agency of Canada to help consumers achieve these goals—specifically, to plan and save for the future using an interactive and dynamic technological resource.

In addition, Small Change strongly aligns with the Financial Consumer Agency’s priorities outlined in the National Strategy:

Collaborating and sharing: Improving Canadians’ financial literacy is a shared responsibility that requires participation from all sectors. The development and roll-out of Small Change represents a collaborative effort between the public, non-profit, and private sectors to strengthen financial literacy in the community.

Tailoring programs and applying plain language principles: To accommodate individual learning and communication styles, it is important to develop resources that reach audiences in both innovative and interactive ways, using plain language and simplified materials. As well, this information must be easily accessible to a broad range of Canadians. Creating access to a free, bilingual and intuitive mobile application, such as Small Change, makes it even easier for many Canadians to learn how to save for their financial future.

Reaching and engaging Canadians: The Financial Consumer Agency of Canada is exploring new ways of building financial learning into existing activities. This creates valuable opportunities to make financial literacy part of an individual’s daily routine. A mobile application like Small Change allows users to pause and think about spending decisions for everyday activities, leveraging a device that, for most people, is used on a daily—if not hourly— basis.

United Way Ottawa

United Way Ottawa strives to make Ottawa a great place to live for everyone. Through research, consultation and analysis, it is able to identify where the local community needs help the most and where its investments will show the greatest results. With one in nine people living in poverty in Ottawa, this organization is committed to ensuring that every person across the city has a place to call home, a job, and a sense of belonging to their community. This is why, since 2011, United Way Ottawa has invested more than $4.5 million into employment and housing-first initiatives.

Creating a more financially literate community is a key component of United Way Ottawa’s efforts to prevent poverty in Ottawa from worsening. In 2015, it supported more than 2,500 people in Ottawa to make better financial decisions. To support this important work, United Way draws on the vast expertise found throughout the community and ensures the right people, organizations and skills are brought together to help Ottawa’s most vulnerable.

Through the Small Change program, United Way Ottawa was able to fulfil its mandate of bringing people together to build a strong, healthy and safe community for all. It allowed the organization to leverage its convening expertise to effectively collaborate with the public, private and non-profit sectors to achieve a shared goal of improving the financial health of Canadians. In collaboration with key organizations, United Way Ottawa was able to use the Small Change application to deliver a meaningful message about the importance of building strong financial planning skills—which aligned with its efforts to move people from poverty to possibility.

Furthermore, as charitable giving continues its steady decline, United Way Ottawa recognizes that traditional fundraising methods are simply not enough to meet the growing needs of the community. United Way Ottawa believes it is critical for social service organizations like United Way to not only consume technology, but also to pioneer the development and innovation of technology to tackle some of the world’s biggest social challenges.

Private sector funding partner

As part of its corporate social responsibility model, this leading financial institution has made a clear commitment to helping Canadians improve their financial literacy skills. To date, it has invested over $12 million in financial education initiatives across North America. Sponsoring the Small Change pilot program presented an additional opportunity to help give back and strengthen financial education in the Ottawa community while also aligning with the financial institution’s corporate social responsibility objectives.

As the pilot program sponsor, the financial institution received a number of associated benefits and positive brand impressions through the product itself, as well as its associated marketing materials. During the pilot period, United Way Ottawa promoted Small Change extensively within the Ottawa-Gatineau region.

EBO Financial Education Centre

With funding provided from a private sector partner via United Way Ottawa, EBO Financial Education Centre was able to fully reinstate and enhance its tax consulting service. Prior to this, a lack of funding had put the long-term viability of the program at risk—meaning hundreds of low-income taxpayers would have no other option but to pay a third-party tax advisor for assistance in filing a tax return.

For these individuals who lack the basic necessities, life can be a daily struggle to survive. Sadly, most simply cannot afford to access the expert guidance needed to obtain the tax returns that are rightfully owed to them. Through the Small Change program, EBO Financial Education Centre was able to achieve millions of dollars in combined savings to help Ottawa’s most vulnerable population. At a high level, the tax savings that were achieved positively contributed to the local economy as a result of recipients’ increased spending power.

The success of this program took EBO Financial Education Centre an important step closer to fulfilling its mission of encouraging individuals and their families to achieve financial autonomy.

End users

During the pilot, a total of 1,098 people actively used the application. Collectively, they performed 1,067 savings events to allow them to virtually save $46,716 toward their cumulative target goal of $1,866,015.

In achieving these savings goals, users experienced the overall benefits of modifying their approach to budgeting. Small Change helped users to understand that by making small changes to their daily spending habits, they could easily save money and reach their financial goals. For many users, it would have come as a surprise that saving could be so straightforward and fun.

Simply by making these small behavioural changes, users were able to start developing responsible spending habits and the confidence needed to create a more financially sustainable future.

The community

The launch of Small Change created significant opportunity to engage with the Ottawa community and contribute to a city-wide conversation about the importance of financial literacy.

United Way Ottawa developed a comprehensive marketing strategy with the overall aim of raising awareness around Small Change and financial education and encouraging downloads of the application. This strategy included the following activities:

• A public launch event on November 26, 2015 at Ottawa City Hall
• A robust media strategy focused on obtaining both earned and owned media coverage
• Content marketing (email, video and blog posts)
• Display and search ads

It also included a number of brand activations whereby members of the general public were encouraged to share their savings goals and post photos on social media using #SmallChangeApp.

Between November 1, 2015–March 31, 2016, the Small Change landing page (www.unitedwayottawa.ca/smallchange) and related blog posts received a total of 1,552 unique page views.

During this time period, other online content relating to Small Change achieved the following results:

• 476 views on YouTube
• A total of 33,872 and 438 engagements on Facebook
• 24,168 impressions; 257 engagements; and 80 tweets using #SmallChangeApp on Twitter

More broadly, the community also benefited from being able to access free financial education resources—either through the Small Change application or the services offered by EBO Financial Education Centre. Having access to these resources created opportunities for individuals and their families to achieve financial autonomy and strengthen their money management skills.

Conclusions

The Small Change application exemplifies just how effective mobile technology can be in influencing behavioural changes that lead to greater financial literacy.

This project also illustrates the important role all sectors play in strengthening the financial literacy of Canadians. Ongoing commitment is needed from governments, educators, financial service providers, employers and non-profit organizations to explore innovative and collaborative approaches to building more financially stable communities across Canada.

Next steps

Although Small Change originated at United Way Ottawa, it is designed for replication across the national United Way network. Doing this would enable the application to be marketed to communities across Canada and would scale to achieve wide-reaching impact.

The application is available in both official languages, and accommodates regional branding and sponsorship. Supporting infrastructure can be readily scaled to accommodate volume, and is designed to support regional use cases, such as locally segmented reporting. An upgraded version of Small Change would offer improved performance and usability, including:

• Increased effectiveness (nudging features, gamification, social interaction)
• Greater personalization and customization
• Additional support for scope and scale of deployment
• Strengthened financial features (e.g., in-built financial management)
• Expanded sponsorship options (more revenue for program funding)

The Financial Consumer Agency of Canada could continue to play a role in shaping the next version of Small Change, from expanding on the financial literacy tips provided to leveraging new market trends and research findings.

Appendix A: Behavioural economics

Gamification

At its core, Small Change uses gamification to help applications users make behavioural changes to their daily savings routines. Users are asked to determine a custom savings goal, like saving for a down payment on a house, and the application then creates a series of savings challenges to help them achieve this goal. These savings challenges align with common day-to-day spending on things like morning coffee, lunches or transportation. Once created, the application tracks the money that was saved and provides the user with helpful savings tips and achievement “badges” to unlock along the way. During the pilot period, as badges were unlocked, Small Change’s private sector funding partner made donation of $1—up to a total of $50,000—to support local financial education programs through United Way Ottawa.

Key data points

The application tracks individual behavioural changes by capturing three key data points: a description of the behaviour the user wants to change; the current frequency of the behaviour; and the cost of that specific behaviour.

For example, Mary wants to save for her first home. She creates a savings goal labelled “New Home” and then creates two savings challenges. She decides to stop buying coffee and to brew her own at home and also take the bus to work instead of driving her car. By making these two small changes, she determines that she will save approximately $4.25 on coffee and $6.75 in car related expenses (gas, parking and maintenance) for a total savings of $11.00 each day. Now all Mary has to do is tap the savings challenges each day and those savings will be automatically tracked within the Small Change application. As this becomes her new routine, she will continue to receive helpful savings tips, unlock fun badges and help give back to her community. Once she has saved enough for her new home she can create a new savings goal to keep saving.

This example is applicable to dozens of behaviours including making a lunch versus purchasing one; using public transportation versus using your own car/paying for parking; using a reusable container versus buying a beverage; smoking versus not smoking; and incurring automated teller machine (ATM) fees.

Nudge theory

The Small Change application is rooted in nudge theory, a concept in behavioural science that uses positive reinforcement and indirect suggestions to influence motives and decision. It is more effective than direct instruction as a mechanism for changing behavior.

The application makes initial suggestions on the common behaviours people want to change, but users also have the opportunity to create their own items. Meanwhile, push notifications give the user updates on everything from how much money they are saving to the potential savings related to continuing the behaviour, reminders to take specific actions and helpful tips on how to reduce spending.

Based on an engagement ladder with 50 levels for each target audience, end users are rewarded as their savings add up. The back-end engagement ladder determines the frequency of messages being pushed to users.

Appendix B: Application usage (November 21, 2015–March 31, 2016)

Appendix C: Savings goals (November 21, 2015–March 31, 2016)

References

Social Research and Demonstration Corporation (SRDC). (2016). The Link between Financial Confidence and Financial Outcomes among Working-aged Canadians. 

The World Bank Institute. (2012). Behavioral Change Using Technology.