HBL
An application that protects bank customers against ill-considered financial decisions and helps them choose optimal investment products.
Why?
To protect bank customers against ill-considered financial decisions.
What?
Assistance in creating optimal investment portfolios for bank clients.
How?
Matching investment products to your emotional profile and risk appetite.
Overview
Hypothekarbank Lenzburg AG is a Swiss mortgage bank listed on the stock exchange and recognized as Switzerland’s most digital bank. He gained this title thanks to the consistent use of new technologies. One of such tools is an application that helps to protect clients against ill-considered financial decisions, which, based on the analysis of the psychological profile and knowledge of economics and finance, allows to choose the optimal investment portfolio.
- Scope
UI/UX, Frontend & Backend Development, QA
- Industry
Banking, Finance, Investment consulting, Securities market
- Region / Country:
Switzerland
Problem
Research in the field of behavioral economics, conducted since the 1970s, shows that people do not make investment decisions on the basis of careful analysis, but act largely under the influence of emotions. On the stock exchange, they are responsible for as much as 60-70% of decisions and are the cause of many irrational behaviors.
According to the perspective theory of Daniel Kahnemann, a psychologist and Nobel laureate in economics, people’s attitude to risk is not constant and investment decisions are influenced by many factors. One of them is the so-called intuitive thinking, which helps in making everyday decisions and avoiding unnecessary mental effort, but in financial matters can have negative effects when the investor feels that he understands the market behavior or invests based on marketing materials.
Problem
Solution
Based on the pioneering research of Kahnemann, two Swiss university professors, Thorsten Hens and Enrico De Giorgi, developed a mathematical model that, based on a set of properly calibrated questions in the field of psychology and finance, allows to determine the emotional profile of an investor and his tendency to risk. Based on this solution, Hypothekerbank Lenzburg AG has developed its own digital tools to protect consumers from ill-considered financial decisions.
The main goal of the project was to determine the client’s emotional profile and his tendency to risk, the current financial situation, the level of knowledge in the field of economics and finance, and expectations related to the investment, and on this basis, proposing an optimal investment portfolio.
Then, based on the mathematical model of prof. De Giorgi, commercialized by BFSG (Behavioral Finance Solutions GmbH), a web application was created that imitates a multi-level questionnaire with an online investing course.
As part of the project, the following were created:
ASP.NET Core web application, consisting of a multi-level questionnaire, divided into sections and implemented with the use of hexagonal architecture (ports and adapters).
User interface design based on the clicked prototype.
One of the main challenges for the application was the exact implementation of the BFSH mathematical model. For this purpose, the domain model of the application was designed, as well as detailed unit tests and end-to-end tests of the user interface.
Project result
Project results
The application has been operating since 2018. Over time, it has been adapted to mobile devices and has evolved into three separate solutions using a common core.
Thanks to it, the bank complies with the Swiss FIDLEG regulatory requirements (Act on Financial Services), obliging financial institutions to protect investors at points of sale and can offer its clients appropriately selected investment products.
Our tests to verify the boundary conditions of the mathematical model of prof. De Giorgi contributed to its improvement.