Investigating the Introduction of a Regulatory Fintech Advancement Designed to Reduce Limited Attention Regarding Inactive Saving Accounts – Data, Survey, and Field Experiment

Abstract

Lost and forgotten retirement savings accounts are increasingly becoming a problem. This paper uses proprietary data, survey data, and a field experiment to study the effect of two campaigns to raise awareness and direct attention to this issue among account holders. The first campaign is based on a fintech innovation – a centralized database, accessible via a website, created by the Israeli financial regulator to help individuals find and manage inactive retirement savings accounts. The website substantially lowered observation and information search costs for finding inactive accounts and was widely publicized. The second campaign utilized the information from the website to encourage individuals (via a tax exemption and an awareness campaign) to close small inactive accounts and avoid new minimum management fees that would gradually exhaust the savings over time. We show evidence that after the campaigns, inactive retirement accounts still only received limited attention. This is more pronounced for individuals with low socioeconomic status and low financial literacy. The results of a controlled field experiment indicate that interventions that provide similar information using a more personal interaction (face-to-face or video) can increase attention.

Keywords: limited attention; retirement savings; financial literacy; financial regulation; fintech; field experiment

JEL Classification: D12, D14, D83, D91, G28, G40, J32