What's causing the sudden 30% decrease in average deposit amounts for Betterment Cash Reserve accounts this quarter?

Introduction

The sudden 30% decrease in average deposit amounts for Betterment Cash Reserve accounts this quarter is a critical issue that demands immediate attention. This analysis will systematically identify, validate, and address the root cause while considering both short-term and long-term implications for our product and users.

I'll approach this problem by first clarifying key details, ruling out external factors, and then diving deep into our product, user journey, and metrics. From there, I'll form data-driven hypotheses, conduct root cause analysis, and propose validation methods and solutions.

Step 1

Clarifying Questions (3 minutes)

• Looking at the timing, I'm thinking this could be seasonal. Has this decrease coincided with any particular time of year or event?

Why it matters: Seasonal patterns could explain the decrease and inform our solution approach. Expected answer: No clear seasonal pattern identified. Impact on approach: If seasonal, we'd focus on adjusting for cyclical trends; if not, we'd investigate other factors.

• Considering user segments, I'm wondering if this decrease is uniform across all users or concentrated in specific groups. Can you provide any breakdown of the decrease by user demographics or account types?

Why it matters: Identifying affected segments helps pinpoint potential causes and tailor solutions. Expected answer: The decrease is more pronounced among high-balance accounts. Impact on approach: We'd focus on investigating factors affecting high-balance users specifically.

• Thinking about recent changes, have there been any significant product updates or policy changes in the last quarter that might have impacted deposit behavior?

Why it matters: Recent changes could directly correlate with the observed decrease. Expected answer: A new fee structure was implemented for accounts above a certain threshold. Impact on approach: We'd analyze the impact of the fee change on deposit behavior.

• Considering market conditions, has there been any notable shift in interest rates or competitive offerings from other financial institutions?

Why it matters: External market factors could be driving users to alternative products. Expected answer: Some competitors have recently increased their interest rates. Impact on approach: We'd evaluate our product positioning and consider adjusting our rates or value proposition.