Behavioural Finance Consulting

Insights & Publications

Explore in-depth insights, reports, analysis, and our latest updates.

AI in Finance – Ethical Challenges

Artificial Intelligence (AI)

Artificial Intelligence (AI) is transforming the financial services industry, enabling advancements in personalised investment advice, smart credit solutions, and AI-driven underwriting. Alongside these opportunities, ethical challenges emerge, such as risks of discrimination, deceptive practices, and diminished customer trust. Integrating behavioural science principles can help financial institutions address these challenges by mitigating data biases, ensuring fairness in credit scoring, and aligning AI systems with ethical standards. Global regulatory frameworks, including the EU AI Act and OECD Principles, provide essential guidance for promoting responsible AI practices in finance. Embedding fairness, inclusivity, and transparency into AI applications strengthens customer trust, supports societal welfare, and fosters a sustainable, client-focused future for financial services.

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Women Are Changing the World of Investment

Women in Finance

Women are emerging as powerful forces in the investment world, set to control nearly 45% of assets under management in Western Europe by 2030. Despite this growth, financial services often fail to address women’s distinct needs and preferences. Women typically favour cautious, diversified, and low-risk investments, with a strong interest in sustainability and ESG-focused solutions. However, barriers such as limited funds, complex financial jargon, and a lack of visible role models hinder their full participation. Addressing these challenges and aligning financial services with women’s priorities—such as long-term planning and wealth preservation—is crucial for fostering financial inclusion and driving meaningful change in the investment landscape.

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Key Elements in Investment Suitability

Advisory Services

Assigning an appropriate portfolio to a client requires a deep understanding of their financial goals, personal preferences, and financial capacity. For accurate investment suitability assessment, the risk assessment framework must consider four critical dimensions: financial capacity (quantitative dimension), psychological tolerance to risk (qualitative dimension), financial knowledge and experience (cognitive dimension), and ESG values (values-based dimension). These dimensions offer a robust foundation for structuring investment recommendations that align not only with the client’s financial needs but also with their psychological comfort and personal values. Integrating these perspectives into suitability assessments fosters informed decision-making, enhances client satisfaction, and supports comprehensive risk management over time.

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Investment Suitability and Portfolio Reporting – Part 2

Advisory Services

Investment suitability is strongly influenced by how portfolio information is presented. Variations in content and format can shape investors’ risk perception and tolerance, potentially leading to skewed assessments and suboptimal investment choices. Discrepancies in presenting returns (net vs. cumulative, percentages vs. monetary), risk ranking, performance order, and format (tables vs. graphs) can alter investor judgement, impacting their understanding of risk and potential gains. A transparent, consistent presentation framework that minimises cognitive biases and supports informed decision-making is essential to align investments with investors’ true risk preferences and financial goals.

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Investment Suitability and Portfolio Reporting – Part 1

Advisory Services

Investment suitability depends on consistent, transparent portfolio reporting. Variations in content, such as differing amounts, portfolio options, time horizons, and risk periods, can lead to misaligned risk perceptions and suboptimal choices. By standardising portfolio presentation and addressing cognitive biases, financial firms empower investors to make decisions aligned with their true preferences and tolerance for risk.

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The Future of Lending

Lending

The future of lending is being transformed by modern data and behavioural analytics, redefining risk assessment and client management. Traditional lending practices often exclude millions of people due to limited data, leaving many “credit invisible.” However, companies like Begini and Behavioural Financial Consulting are at the forefront of innovation, using data-driven insights and advanced technology to create more inclusive, personalised lending experiences. From improved fraud detection to gamified psychometric assessments, these modern solutions offer lenders smarter, more accurate ways to assess creditworthiness and manage clients, ensuring fairer and more secure lending.

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