The Influence of Gamification On Finance And Banking

Video gaming, a pastime enjoyed by nearly half the world’s population, is doing more than just providing entertainment. It’s driving a new trend known as ‘gamification,’ which profoundly impacts areas you wouldn’t usually associate with fun – including banking and financial services.

For the younger Generation Z, for instance, who are used to engaging digital content, traditional banking could seem dull. But what if their banking experience became as interactive as a video game, with rewards and a sense of achievement? This is what ‘gamification’ is all about.

The recent push towards digital transformation brought about by the pandemic has accelerated this trend. Banks are not just adding game-like elements to their services; they’re also incorporating digital entertainment as a whole to boost customer engagement. 

This article will explore gamification and its transformative role in the financial services industry.

What Is Gamification?

Essentially, gamification brings game-playing elements into areas that aren’t typically associated with games. This is done to incentivise users, particularly those on social media platforms, to engage more deeply with the service or product.

This strategy serves a dual purpose. On the one hand, it helps businesses gather more detailed data about how users behave, giving them valuable insights into users’ actions and preferences. This rich pool of information can then spot new marketing opportunities and fine-tune business operations.

On the other hand, gamification makes typically boring activities more fun, which helps increase user engagement and loyalty.

The potential of this trend is enormous. It’s estimated that by 2028, the worldwide gamification industry could reach a staggering $58.8 billion growth rate of 26.8% per year from 2022 to 2028. This suggests that gamification is not just a passing trend but a transformative force that will impact industries beyond financial services.

The Origin Of Gamification

The concept of gamification, though not always known by that name, has a rich and fascinating history. Its roots can be traced back to the early 20th century, with the Boy Scouts movement in 1908, which used badges as recognition and motivation. 

The potential of games to engage employees was first recognised in 1973 with Charles A Coonradt’s publication, “The Game of Work.” The first attempt to adopt gamification was seen in 1981 when American Airlines launched AAdvantage, the world’s first frequent flier program, using rewards to foster customer loyalty.

The term ‘gamification’ was coined in 2002 by Nick Pelling while designing a game-like user interface for commercial electronic devices. This marked the beginning of a new era where the power of game mechanics was slowly gaining recognition. In 2005, Rajat Paharia founded Bunchball, the first modern gamification platform designed to boost website engagement by adding a layer of game mechanics.

The potential for gamification was further recognised in 2010 when Jane McGonigal delivered her groundbreaking TED Talk, “Gaming Can Make a Better World.” This talk could well be the defining moment in the history of gamification.

Today, gamification is everywhere, found in nearly all apps and financial industries, and used to increase engagement and productivity. But how exactly is the financial sector adopting gamification?

How Does Gamification Work For Finance And Banking?

In essence, applying game-like elements turns ordinary banking procedures into dynamic and interactive experiences, enhancing user engagement.

Consider savings a critical aspect of financial planning. Banks may integrate gamification by introducing a reward-based system, where customers earn points or unlock accomplishments for reaching specific saving goals. This not only injects a sense of excitement into the saving process but also promotes prudent financial habits.

Gamification also provides an innovative approach to financial education. By creating interactive games that simplify complex financial concepts, banks make the world of finance less daunting and more accessible to their customers. These educational games might cover a range of subjects, from understanding the risks associated with investments to grasping the various types of insurance policies.

Moreover, gamification yields valuable insights into user behaviour, allowing financial institutions to effectively adjust their services and marketing strategies to meet customer needs.

Benefits Of Gamification For Banking And Finance

Adopting gamification within the banking and finance sector yields myriad benefits that extend to customers and businesses. These are not limited to but include the following.

Enhanced User Engagement 

Gamification contributes to an increase in user interaction with mobile and web applications. By making these platforms more interactive and enjoyable, customers are encouraged to spend more time using these services, bolstering their relationship with the banking institution.

Simplified Financial Understanding

By breaking down complex banking procedures into engaging and understandable elements, gamification aids in boosting financial literacy among users. This increased understanding enables customers to make informed financial decisions with confidence.

Promotion of Savings and Investments

Gamification strategies can be designed to stimulate responsible financial behaviour. For instance, linking credit card expenditures to reward-based savings could motivate customers to save more and spend wisely.

Expanded Customer Reach and Reputation

Customers satisfied with a gamified banking experience will likely recommend the financial institution to others, leading to increased visibility and enhanced reputation. This form of organic promotion can significantly expand the customer base.

Insightful Data Collection

Gamification allows financial institutions to collect valuable customer behaviour and preferences data. These insights can be instrumental in developing new business strategies, ensuring the services align with customers’ needs.

Increased Customer Retention

The enjoyable and rewarding experiences created through gamification can increase customer satisfaction. This satisfaction often translates into loyalty, thereby increasing customer retention rates.

How To Gamify Your Financial Business

Gamification is a formidable instrument that financial enterprises can utilise to foster sound financial habits, stimulate savings, and deepen customer engagement. It further serves as a vehicle for expanding the customer base and establishing robust relationships with current clients while facilitating novel competitive strategies. The following elucidates eight powerful gamification strategies that can be seamlessly integrated into banking or financial software.

1. Institute Incentive Schemes

The implementation of rewards is a compelling technique within online banking and financial applications. The rewards, which need not be of high monetary value, can take the form of recognition for consistent saving behaviours or virtual points for choosing environmentally friendly options like paperless banking.

2. Use the Power of Social Media

Promoting shared experiences and milestones on social media platforms can cultivate community, augment brand recognition, and heighten customer engagement.

3. Maintain Equilibrium Between Difficulty and Accessibility

Ensuring the user experience is engaging yet not overly complex is pivotal. Striking this balance means users remain challenged yet feel a sense of achievement, which encourages continued engagement.

4. Monitor and Visualize User Progress

Implementing visual markers, such as progress bars, to demonstrate the users’ advancement towards their goals fosters sustained motivation and focus on their objectives.

5. Integrate Interactive Learning

Including puzzles, quizzes, or similar interactive games can enhance customers’ financial literacy. These engaging methods deliver valuable insights about user behaviour while keeping the customer entertained.

6. Encourage Consistent Engagement

By incentivising regular interactions with the application through badges or rewards, users are encouraged to form a habitual pattern of using the app, promoting consistent engagement.

7. Personalize User Challenges

Offering challenges or tasks based on an individual’s prior behaviour or preferences personalises the gamification experience, making it more appealing and interactive. These could range from saving goals based on spending habits to investment quizzes adapted to their level of financial understanding.

8. Regularly Assess and Adapt

Constant evaluation of the efficacy of the implemented gamification strategies and adjustments based on user feedback and behaviour is essential to ensure the continued relevance and effectiveness of the approach.

Examples Of Gamification In Finance And Banking

Several financial institutions and banking entities have successfully employed gamification strategies to enhance user engagement and encourage sound financial practices. Below are a few noteworthy examples:

Standard Chartered Bank

The “Twist and Win” feature exemplifies a successful gamification strategy. Like a digital gumball machine, this initiative lets customers earn cash back on card transactions by digitally twisting layers in the bank’s app. The result was a significant boost in credit card spending among customers.

BBVA

This digital bank introduced “BBVA Games,” a gamified initiative that appears as a conventional game, stimulating customers to use their online services. By establishing a virtual economy that awards customers with points, BBVA won an award for this inventive gamification strategy and also garnered the trust of over 100,000 individuals within six months.

CommBank

In 2011, CommBank launched “Investorville,” a property-simulator game. It guides potential buyers through various mortgage plans, renovations, and property tax scenarios. It also illustrates the possible outcomes of faulty financial investment decisions, promoting responsible investment habits.

PNC Bank

PNC Bank’s “Virtual Wallet” is an innovative product to incentivise customer savings. It introduced an interactive widget called “Punch the Pig,” a digital piggy bank that users could interact with while engaging with their wallet, thus promoting savings.

Monobank

As an online banking platform, Monobank employs several enjoyable techniques to provide customer services. It rewards customer spending through regular cashback, and uniquely, customers can carry out financial transactions to other cards simply by shaking their phones.

Robinhood

This brokerage application offers users simple trading options without additional requirements, including zero-commission orders on stock exchanges. Robinhood also provides real-time market data, thus facilitating informed investment decisions.

PayPal

A pioneer in digital financial services, PayPal uses gamification with tools like “PayPalMe.” This tool offers users, especially freelancers, a customisable and free landing page for receiving payments, simplifying the process of receiving funds.

How Far Can You Trust Gamified Financial Services?

The emerging trend of gamification in financial matters has attracted considerable attention. With platforms like Reddit providing advice for trading and the rise of Dogecoin, a cryptocurrency inspired by a popular internet meme, numerous examples illustrate the potential hazards of financial gamification. When one’s life savings are at stake, the situation becomes much more severe than indulging in virtual activities on games such as Animal Crossing.

The limits of financial gamification, particularly concerning investments and other valuable assets, may be unclear to some individuals. There exists a genuine risk of developing an addiction similar to video gaming. Although most financial apps incorporating gamification aim to promote small-scale savings rather than generating instant wealth, those with a history of excessive gambling should exercise extreme caution.

There are various steps that individuals can take to ensure that the use of financial gamification aligns with their lifestyle and long-term financial objectives. Before entrusting any app with your bank details or financial information, it is essential to conduct thorough research. Use instructional resources to understand the functionality of the service entirely.

Moreover, it’s essential to understand how these financial apps manage your data. Exploring the app’s FAQs section can offer insights into their data privacy practices, their methods of generating revenue, and their affiliations with third-party entities. Many fintech firms collaborate with traditional banking institutions to protect user funds. However, some operate autonomously, making it crucial to verify that any funds you deposit are safeguarded by federal insurance.

Final Takeaway

AI, Web3, and virtual reality come together. It raises interesting questions about the future of banking and finance. Could GameFi and DeFi blend? Might our finances be merged in the virtual and real world? These advanced technologies point to a future where this could happen, changing our understanding of how we handle money.