Cognitive Behavioral Science and Banking

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Sankaet Pathak
November 27, 2017

Most successful consumer-facing products succeed not only when they solve a basic need, but also when they are able to surprise and delight customers.

This feeling of surprise and delight occurs because these products/services trigger dopamine responses in our brains. These cycles are called Dopamine Feedback Loops. Usually dopamine loops get a bad rep because they can be linked to addiction of social media, fast food, etc. But there are scenarios where dopamine loops can have positive influences over people.

One such area is Cognitive Behavioral Therapy (or CBT for short). CBT is a psychosocial intervention that is the most widely used evidence-based practice for improving mental health. It focuses on developing personal coping strategies that help individuals with emotional regulation. It was originally designed to treat depression, and is now used for a number of mental health conditions.

At the core of CBT are dopamine feedback loops. The idea is to build reward systems in which “good” interactions are rewarded with a small dose of dopamine. These build coping strategies that help individuals feel better, and if they succeed in doing so, then those coping strategies (or behavioral changes) will be long lasting.


Just like with CBT, we believe we can use dopamine feedback loops in banking to affect positive long-lasting changes to people’s financial behaviors.

Currently with credit cards, our culture is optimized around spending money — people get cashback rewards for shopping more. We believe this foundation needs to be disrupted to encourage people to act in ways that will benefit their long term financial health. So here is our plan:

Build a savings product

We plan on creating a savings product that rewards individuals for saving. Here we plan to incorporate the unpredictability of rewards as the primary driver for creating dopamine loops. The goal is to give individuals rewards for saving money, kind of like a less predictable interest rate¹.

Improve loan servicing

We want to create a more flexible loan servicing platform, so that people associate positive experiences/thoughts with paying back loans.

Here we want to build a notifications infrastructure where people get positive reinforcement for paying back loans ahead of, or on time. On top of that, we will add some flexibility in loan repayments that would allow individuals to delay repayments for 1–2 weeks without any penalty².

Build a credit card

This will be our final frontier. We would like to combine our card issuance and loan origination products to build a credit card where cashback rewards are disbursed during a savings event, instead of a spending event.

We will be focused on these three products for most of next year and hope to start releasing them as soon as end of first quarter³.


Now why are we talking about this so publicly? For three reasons:

We are dealing with people’s brains

We are dealing with people’s brains and emotions here and we take that responsibility very seriously. For that reason, we don’t want to do this in secret. Rather, we want to be as open and transparent as possible. For that reason, as we conduct studies and learn more, we will open-source all of our findings⁴.

We need more talent

This is a new field of study for us and we want to attract talented behavioral scientists to join our team (we are hiring!). So writing this open letter will help us attract talent.

We are not enough

We hope to inspire and encourage other companies to work on this problem as well. Improving people’s financial lives is a challenging problem and is not isolated to Americans alone. We hope that as we learn more, this literature and research can help jumpstart such technologies at other FinTech companies as well (we also think the work we do here can help with education at the K-8 school level. But more on that later).


We are really excited about this next chapter in Synapse’s journey. So far we have been focused on integrating existing banking technologies under one roof. But we think now we have all the basic building blocks figured out and it’s time to attempt something a little more ambitious.

If you are as passionate as we are about improving financial lives of everyday Americans and want to contribute, please reach out to us at — also we are hiring!

[1] The rewards will be derived from an underlying interest rate, but the disbursement of that interest will be a little more sporadic to help create an anticipation for the next reward.

[2] Usually when people are low on cash, small things like flexibility on repayments with no penalty enables them to be in control of the situation. We believe this freedom will help improve their financial behavior.

[3] It goes without saying that all these would be API or UIaaS products.

[4] We feel open-source here creates the most value for two reasons: a) Since most of the work in this field has been done in relative obscurity, shining some light to how behavioral science can be used/abused can give regulators some insight into how to regulate this field. b) Some friends argued that open-sourcing this research could also help bad actors build bad products. Though that is true, we still believe that there are more good actors than bad, so helping the good actors with this stuff will counteract any work done by bad actors very easily (same argument can be made for doing open AI research).

Sankaet Pathak

Founder & CEO @ Synapse

©Synapse Financial Technologies Inc. 2020