Gamification and Financial Services
With the advent of improved and fancy technological features, trading is no longer considered to be an elite activity. With the aim to attract and motivate users, trading has merged gradually with an interesting advanced domain: gaming. Lowering the barriers of established behavioural norms, ‘gamifying’ offers new rules and realities by influencing creativity and learning. Gamification "leverages the innate human desire for achievement, competition, and social interaction", according to Ronins. Valued at USD 10.19 million in 2020, the global gamification market is expected to reach USD 38.42 million by 2026, growing at a Compound Annual Growth Rate of 25.10% over the period 2021-2026. The figure below shows the value of the gamification market worldwide in 2016 and 2021. With the aim of inducing innovation and engagement, this growth reflects the use of gamification systems to architecture human behaviour.
Gamification as a Core Strategy
Gamification enables financial firms to add value across the entire value chain and promotes the understanding of game mechanics that allow people to be engaged and map their ideas to desired business outcomes. In the financial services world, gamification is about customer-centricity. With the use of game techniques, business processes are more interesting and appealing.
By introducing the sneaker try-on game, Nike has taken gamification to the next level. In 2018, Nike China has teamed up with Kennedy Shanghai to produce a three-minute game, allowing customers to try Nike’s Epic React shoes on treadmills in stores across Shanghai, Beijing, and Guangzhou. By creating an avatar, customers try out the shoes and navigate through a virtual world, bouncing on clouds and sharing their experience on social media. Like Under Armour, Nike is under pressure as Adidas outpaces rivals in North America. Hence, Nike’s response to falling behind famous running brands was to develop both software and hardware-based solution that depend heavily on games: The Nike Run Club. It is an app that uses data to track customers’ runs and monitor exercise duration as shown below:
With a download growth of over 45%, the app users spend 3 times more than guest customers. Today, gamification is key to Nike’s strategy. Fuel band and Spotswatch are tools that have successfully been launched and entered the market with great success. As they measure movement, those wearables provide the opportunity to customers to optimise the cost of their insurance when they provide data from their devices.
Leveling up the Money Game: Wealth Management
Gamification allows wealth managers to add value to the value chain by including product development, marketing, and customer education. Gamification enhances the investor-advisor relationship by building more trust and transparency. Investors have the opportunity to train and adopt a simulation objective while working in a virtual environment. By collecting different experiences, the investor can easily anticipate and act on market fluctuations. Since different investors have different risk tolerance levels, gamification tests various investment strategies and creates probabilistic scenarios to drive wealth allocation. Sun Life Financial in Canada has introduced a gamified online program to increase the financial literacy of employees who have a Sun Life workplace retirement plan through their employer. With the game, users have to complete different levels and missions which aim at increasing their knowledge on important retirement and investment planning steps. Younger members who use the game become accustomed to quick feedback and tech-based learning. In that way, these digitally powered offerings can assist wealth management services providers by attracting younger clients.
Levelling up the Money Game: Banking and Insurance Sector
Previously, the high cost of financial infrastructure to service market profitability caused the low penetration of financial services in growth markets. Without the use of cash but instead using cards and online banking, gamification is considered to be part of the strategy to drive financial inclusion in growth markets. Barclaycard US uses gamification by applying game design techniques with the aim of marketing ‘Ring’, a new social credit card launched in partnership with MasterCard. ‘Barclaycard Ring’ followed shortly and cardholders receive incentives for sharing their ideas and suggestions. Banking firms are using gamification to develop better insights about potential customers and assess their attractiveness. Lloyd’s TSB for example has a game called ‘Innovation Market’ which encourages employees to participate in the crowd-sourcing platform. The best ideas from these employees are not only turned into assets and ready to trade on a stock market but are also implemented when considered appropriate.
The use of gamification is becoming widespread across many different industries. Hiring using gamification is helping companies to focus on quality hiring based off of human factors, rather than purely relying upon statistical factors. Gamification also helps insurance companies to engage with their audience. The insurance sector competes by responding to real-time events and has to be as fast as its competitors.
With different problems to solve, insurance bankers, with the help of gamification, find ways to collect new leads for the outbound sales teams and figure out the customers who can save on their insurance. American Family Insurance introduced the iAMFAM simulation on Facebook where users can set up avatars while carrying out life activities like planning their career or purchasing a house. This game then helps the users decide the type of insurance they should get. Users get engaged and make informed decisions as shown by the image below:
The increased penetration of smart and wearable devices is leading to structural changes in socialisation and increased acceptance of digital identity. Big data analytics are offering the possibility to better understand customers’ behavioural patterns. Other than reduced distribution costs and the spread of risk, gamification allows social media mining where finance players such as FICO and Moven, and Lendup adopt gamification data in their credit scoring models. Gamification is expected to open doors to new asset classes which will include the measurement of real-time behavioural data and availability of risk metrics to allow trading of credit derivatives. Firms adopting gamification as a core tool and strategy can deliver tailored solutions, thereby improving their competitive positioning.