How Human Behaviour Shapes Financial Data

Greg B Davies

Head of Behavioural Finance

Join Greg Davies and discover how behavioural data reveal what drives financial decisions, combining transactions, interactions, and personality to improve advice, outcomes, and compliance.

Wealth Management

Join Greg Davies and discover how behavioural data reveal what drives financial decisions, combining transactions, interactions, and personality to improve advice, outcomes, and compliance.

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How Human Behaviour Shapes Financial Data

14 mins 31 secs

Key learning objectives:

Define behavioural data and distinguish between transactional, interaction, and financial-personality data
Understand how behavioural data reveal emotions, motivations, and decision-making patterns
Identify regulatory expectations requiring firms to monitor and act on behavioural insights
Apply practical strategies for integrating behavioural data into client support and compliance

Overview:

Behavioural data reveal not just what people do, but how and why they do it. They capture decisions in action (trades, logins, hesitations) and connect them with deeper emotional signals and personality traits. Transactional, interaction, and financial-personality data together provide a fuller picture of client behaviour, allowing advisers to anticipate risks and tailor support. Used carefully, behavioural data improve financial outcomes and meet regulatory expectations, but without rigour, they risk becoming noise. Their power lies in empathetic, context-driven interpretation that transforms numbers into genuine human insight.

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Summary

What are behavioural data and why do they matter?

Behavioural data go beyond financial records to reveal how people make decisions and how emotions influence their choices. They capture actions (transactions), decision processes (interactions), and stable traits (financial personality).

Together, these provide a multidimensional view of client behaviour, enabling advisers to move past assumptions and better understand the fears, doubts, or confidence shaping financial decisions.

What are the three types of behavioural data?

Transactional data show revealed preferences through actions like trades, deposits, or product switches
Interaction data highlight the decision journey; logins, hesitations, repeated actions, or adviser contact
Financial-personality data capture stable psychological traits such as risk tolerance, composure, and impulsivity

When combined, these datasets provide a richer picture, showing not just what happened but why, and how best to respond.

How can combining behavioural data improve outcomes?

Identical financial profiles can mask very different behaviours. For example, two clients may rarely trade, but one shows anxious login patterns and low composure, while the other remains calm and confident.

Understanding these differences allows advisers to tailor support, deliberate friction for impulsive clients, reassurance for anxious ones, and minimal intervention for the composed. This personalised approach improves decision-making and builds stronger client relationships.

What role do ethics and regulation play?

The FCA’s Consumer Duty requires firms to act in customers’ best interests, avoid foreseeable harm, and account for behavioural biases. Behavioural data provide the evidence to meet these standards, highlighting when clients are vulnerable and allowing firms to intervene early. Ignoring such signals could expose firms to regulatory criticism and client harm. Clear documentation of insights and interventions strengthens compliance.

What are best practices and pitfalls in applying behavioural data?

Effective strategies include regular behavioural check-ins, proactive communication based on interaction signals, and maintaining transparent records of why interventions occur.

Pitfalls include relying only on transactions, misinterpreting signals without personality context, or using rigid stereotypes. Data must be clean, consistent, and interpreted cautiously; otherwise, behavioural insights risk being misleading.

Applied carefully, they can transform client support, blending human empathy with data-driven precision.

Click HERE to find out your financial personality and investment persona.

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Greg B Davies

Greg B Davies is a behavioural finance specialist and Head of Behavioural Finance at Oxford Risk, a fintech company focused on building behavioural technology to help people make better financial decisions. He started the first behavioural finance team at Barclays back in 2006 and has been working in this space for nearly two decades. He holds a PhD in Behavioural Decision Theory from Cambridge, and has spent his career turning academic insights into practical tools, such as measuring risk tolerance and designing nudges. He is also the creator of The Art of Behavioural Investing, a course designed to help everyday investors build better habits.

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