Gamification - A good idea for a serious topic like financial services?

In today’s world, companies need to fight hard for consumer’s time and attention. For financial service companies this is no different. As financial services are often perceived as boring and complex, many banks and insurers have difficulties to engage with their customers (especially now that contacts have become more and more digital). Obviously a higher user engagement allows more user data (and associated insights) to be gathered, but also gives more (cross-) selling opportunities and results in a higher customer retention (i.e. increased customer loyalty).

Some banks and insurers try to boost this engagement with their existing customers and with new prospects via 3rd party platforms (i.e. via so called embedded financial services), others try to attract users to their own app by offering 3rd party services in a sort of a super-app setup (cfr. my blog "From app to super-app to personal assistant" - https://bankloch.blogspot.com/2020/08/from-app-to-super-app-to-personal.html ), while a last category tries to make their client app and its financial services products and services stand out, by making them more appealing and engaging. Obviously this is done by an intuitive and frictionless user experience, but some banks and insurers go one step further by using the concept of "gamification".

"Gamification" does not mean turning the banking or insurance app (or part of it) into an actual game (although it could be), but rather leveraging specific gameplay principles, design elements and mechanisms in another industry (i.e. in a non-game context), in this case the financial services industry. The gaming industry deploys already for years specific techniques, which are well-documented in the behavioral psychology, to make games more fun, more engaging, more rewarding and even more addictive. This is usually done by stimulating the primal motives of curiosity, scarcity and accomplishment.
Concretely this means that features like points, scoreboards or leaderboards, objectives (via missions, challenges or quests), levels or milestones, ratings and rankings, badges, avatars, team mates, performance graphs, progress bars, storytelling…​ are integrated in the user flows of a banking or insurance app. These activate user emotions and allow to increase the engagement and motivation of the end-user and to change certain behavior of this end-user. In short they convert a boring activity into a fun one.

Although gamification is one of the most powerful methods of motivating people and can have very successful results, a delicate balance needs to be found between making the user flow fun and engaging, while avoiding at the same time to resemble too strongly a real game, as this would probably have a negative impact on the trustworthiness of the financial services company (finances are still a serious business) and could also have negative impacts on the financials of the customer. Unlike in a game, the products and services of a financial services company have no reset button or no reincarnation possibilities. This means privacy, security, risk, and compliance should still be the first concern and priority of a financial services company. Furthermore a too strong usage of gamification techniques can also encourage unintended behaviors and lead to a bad customer experience, e.g. when the customer starts comparing his "game performance" with others.
But financial services companies don’t only need to safeguard this balance, they also need to make sure they can reap the benefits of this gamification investments. Just like with other innovative techniques like AI or Blockchain, a badly thought out implementation will give little to no positive results. It is therefore important to integrate gamification in the overall business strategy, to ensure a structure and consistent implementation and to avoid a too strong focus on the gadgets.

The typical domains where gamification is applied in the financial services sector are:

• Boosting a saving culture via saving goals and other easy saving mechanisms (e.g. capping every bank transaction and automatically saving or even investing the rounding difference). This includes short-term saving on a saving account, but also medium-term to long-term investing and pension planning.

• Increasing good daily financial management, through PFM apps with budget plans, which allow the customer to easily follow-up his spending and stick to his budget plan.

• Increasing knowledge of financial services and products(increase financial literacy). This includes explaining general concepts like inflation, liquidity management, diversification…​ in a fun and visual way, but it allows also to explain more complex topics, like complex investment products, risk management and investing strategies, via very intuitive explanations (e.g. short movies or games) and What-If simulators.

• Motivating and training employees: real life simulators work extremely well to train bank and insurance employees, as the trainees can keep better attention and remember much more of the material afterwards, compared to a traditional training course.

• Reducing risk for claims on an insured good. In the insurance sector, a lot of efforts are made to engage with the customers, but also to dynamically adapt the premium of an insurance contract based on the customer’s behavior. This can be e.g. a usage-based car insurance, which keeps not only track of the car usage, but also includes a scoring and dashboard on the safe driving behavior of the customer.

• Change the behavior of your customers for the better from a societal point of view. For a bank or insurer this will not directly generate revenues but allows to position the company as a more sustainable and ethical player in the market. Gamification will typically be used to improve the health of the customers, push for more local, healthy or ecological consumption, reduce the customer’s ecological footprint, contribute more to charity, reduce the usage of paper (e.g. via digital statements), cash (e.g. via mobile payments) or branches (more online/mobile transactions and advise)…​

• Create the community feeling: this can be achieved by cultivating a customer bank community (recommending the bank to other people, but also exchanging info about the bank internally), but also via short customer feedback loops (via surveys, feedback during A/B testing…​) investment communities or crowdsourcing (e.g. stimulate customers to report and correct data issues, to classify transactions in categories or to share certain personal data…​)

As these examples indicate gamification is mainly used to explain complex topics to a user and to change his behavior. However often the goal behind it is also to collect data about the user (precious analytical data), to serve him more personal products, services and advise afterwards. A game requires actions and actions leave digital traces.

Some nice examples of the usage of gamification in the financial services domain are:

• A lot of neobanks, like e.g. Xinja bank in Australia (which unfortunately recently stopped its business) or Monobank in Ukraine, use several gaming elements to make the banking experience more pleasant, e.g. bright color schemes, animated characters (ninja-emojis for Xinja and cute cats for Monobank) and nice innovative game-like payment features (e.g. Shake of Monobank allowing to initiate a peer-to-peer money transfer by shaking your phones when standing nearby).

• More traditional a lot of incumbent banks uses quizzes and puzzles to educate their customers about their finances and engage them. This can be old fashioned (but still very effective) in the form of receiving a tombola ticket for every X euro you save or invest, but also more modern via games organized on social media. For example BBVA was one of the first to educate its customers via videos and tutorials, which resulted in points, that could be redeemed for music downloads or movie streams. Another nice example is SaveUp.com where customers perform financial activities (like paying a credit card bills) that win them credits that can be used to play for money prizes.
  One step further in this education and providing insights are simulator games, which allow to simulate specific financial situations. A good example is the Investorville game, which was deployed almost a decade ago by CommonWealth bank. This game allows to simulate buying and owning real estate, like applying for different mortgages, pay taxes, do a renovation…​
  Even more extreme, some banks have a virtual presence on games like Minecraft or Pokemon Go. This is usually very marketing driven, but it can also be an interesting way to engage with millennials.

• In the domain of pushing people to save or invest more, there are numerous examples of PFM modules and Saving Goal modules, with multiple gamification elements. A very nice example is PNC Punch the Pig, which allows the customer to “punch” a piggy bank that pops up. This "punch" will transfer money to the user’s saving account.

• In the domain of training of internal staff, a very nice example are the different Bank Simulators, which allow to simulate very well the different decisions a bank needs to take to align the high profit expectations of shareholders, while protecting the precious customer deposits, i.e. carefully balancing out liquidity, interest-rate, market and credit risks.

• In the category of changing customer behavior for the common good, it is interesting to have a look at my blog "Innovation is the key to solve our climate issues (part 2) - The financial services sector as change enabler" - (https://bankloch.blogspot.com/2020/08/innovation-is-key-to-solve-our-climate_30.html), providing a number of examples where banks actively push their customers to become more sustainable.
  Another nice example here is Emirates NBD, which formed a partnership with a fitness app. The more active and healthier the customers were (according to the fitness app), the higher the interest rate on deposits was given.

• Fostering communities, e.g. investment communities (cfr. the Robinhood investment community), but also communities around a specific banking brand or product. E.g. Barclays Ring is a social credit card that applies game design techniques to make card-related activities more engaging. This also includes the fostering of a social community of cardholders. Another nice example is the "KBC Vindr" initiative, which stimulates a community of SMEs, which all bank at KBC, to help each other and do business together.

Clearly, gamification has a lot of potential, but also comes with a lot of pitfalls. Therefore a professional support to implement these techniques is no luxury. In the meantime already a number of vendors are experimenting with "gamification-as-a-service" offers, like PayPerks, Misys (BankFusion), Moroku, SAS Games…​
Clearly with the higher focus on customer centricity and user engagement of banks and insurers, gamification will only gain in importance and become more generally accepted. Hopefully this will allow to change the common perception of most consumers that finances are (need to be) boring.

Check out all my blogs on https://bankloch.blogspot.com/