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Wells Fargo just paid me $300 to open a checking account I was already going to open. I know this sounds like a win. Who doesn't love free money? But this seemingly generous bonus reveals everything wrong with how to design incentives.
The story starts with my husband and I putting an offer on a home. Wells Fargo had the best loan rates, but there was a catch: like most lenders, they required us to open checking and brokerage accounts with them first. What followed was a masterclass in how not to design a banking experience—from misplaced incentives to mind-numbing friction.
Selection bias: When incentives miss the mark
Visit wellsfargo.com and you'll see a $300 bonus offer to open a checking account. If you're typing Wellsfargo.com into your browser, you probably already want to do business with Wells Fargo. I certainly did—I needed these accounts for my loan. By offering bonuses here, Wells Fargo is essentially giving discounts to people who would become customers anyway, rather than capturing new customers who are actively comparing options.
This mirrors what we see with employer wellness programs. A large-scale study of 4,000 Illinois employees found these programs had zero effect on health outcomes, medical spending, or productivity. Why? The people who enrolled were already health-conscious. The incentives were subsidizing existing habits, not changing behavior.
The broader theoretical principle here is about targeting interventions at the decision point where they can actually influence behavior. So, where should Wells Fargo offer incentives?
The answer: When people Google "checking account"! That's where new customers actually shop for banking. Chase and Discover get this—they appear in search results with bonus offers. Wells Fargo does, too, but without the incentive. They're spending money on the wrong people in the wrong places.
How can you avoid this? By:
Targeting the comparison/decision phase (e.g., search results)
Reaching people who haven't already decided to buy
Focusing on changing behavior rather than rewarding existing behavior
Dan Ariely has a nice paper and analogy: you don’t want to give coupons to customers when they’re already in checkout. You want to give it to them when they enter the store. When are your customers entering the store?
How do you get customers to “self serve” vs. contact you?
The teardown (pro tip: watch it to see what I mean) also highlights a common question that Irrational Labs gets asked a lot: How do we get users to engage digitally vs. call us—or worse, go into a branch?
Wells Fargo is likely also contemplating this. They’ve closed over 60 branches in the last 18 months. They need customers to engage online.
And yet it seems their web team missed the memo. Their sign-up flow for new checking accounts immediately asks you where you want to open the account—and there are just two options: “online” or “visit a branch”.
These options are presented to the user without any visual hierarchy or recommendation by Wells Fargo. Like many companies, they may assume the customer has a strong preference on which option is best for them, and that the customer will choose optimally. Behavioral science tells us something different: many preferences aren’t that strong. In fact, they’re often created in the moment.
We showed this at Irrational Labs. In an experiment with a large company's customer support system, simply adding the word "recommended" next to one channel significantly shifted user behavior. People weren't coming in with rigid preferences—they were looking for cues on what to do.
If Wells Fargo wants to move their customers to digital solutions, they’ll need to help users get there with a stronger design. They could transform their choice architecture with three simple changes:
1️⃣ Label online signup as "recommended"
2️⃣ Make the online option visually prominent
3️⃣ Present online as the default with branch signup as a clear backup option
I’d be more sympathetic to them if the experience of going to a branch was delightful. Sadly, it was the opposite. Given my loan situation, I was told I needed to make an appointment at a branch. How did that go?
⌚️ It took 26 minutes to open a checking account once I sat down with the teller.
😱 Then it took another 37 minutes for the brokerage account.
… And all while repeating information I'd already entered online. This does not include time spent driving to the branch.
Two weeks later, my checking account sits empty. My debit card remains unactivated. I got one lonely email about activation. Despite investing significant time in getting me to open accounts, Wells Fargo seems unconcerned about whether I become an active user. After spending all that effort and money on acquisition, they dropped the ball on activation.
The lesson for product teams
Ironically, Wells Fargo has incentives they could offer. They had the best loan rate (why else would I have endured all this friction?). But they forgot about self-selection. And instead of leveraging this advantage, they're paying bonuses to already-converted customers while maintaining costly processes to acquire new customers.
Product teams that want to avoid this should:
🎯 Target incentives where they'll actually change behavior
➡️ Design choice architecture that aligns with what’s best for the user
🚀 Convert expensive acquisitions into active users
What friction points have you encountered in banking? Share your stories below. And if you're working on incentive design in your product, drop me a line at kristen@irrationallabs.com.
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