Can gamification create a better financial future?

The way we manage our money has changed rapidly in the past 20 years. Gone are the days of going to your bank’s physical location to deposit or withdraw money. But what will the future of fintech be? Can we expect gamification to infiltrate the finance world? Business Leader investigates…

In 2014, 85% of the UK’s banking market was served by only five big banks – whereas today, technology and the desire for convenience have opened up the finance world to innovative digital services.

The banking sector has changed so quickly that according to PWC’s Financial Services Institute, nearly half of consumers never visited a physical bank in 2017. Today, most people access their bank accounts through their smartphones, and in recent years apps such as Monzo, Revolut and MoneyBox have revolutionised what a bank is, by not having a physical branch at all.

But as consumers, particularly young ones, become more tech-savvy and look for ways to save easily and more efficiently, banks create ways to keep consumers engaged – new-age digital banks send live payment notifications, allow users to create ‘savings pots’ and accumulate funds from spare change, and easily create savings targets and deadlines.

Many players in the finance world have utilised gameplay principles in their attempts to keep users engaged and help them save more money. Adding gameplay elements into finance makes saving money more engaging, rewarding, and addictive – this is because gaming stimulates human curiosity and a desire for accomplishment.

Prem Patel, Managing Director at shopper activation business Catalina UK, comments: “Gamification is undoubtedly providing consumers with opportunities to save money across a range of retail-focused sectors including banking and finance, where it is becoming commonplace to offer financial rewards to customers who complete certain tasks or missions.

“Not only is this approach beneficial to the consumer as it can save them money, but it is also helping banks and finance companies build loyalty, particularly with the usage of banking apps, and it can nurture a closer connection with their customers.

“A recent survey by Simpson Carpenter Insights reported that 83% of shoppers engaging in gamification mechanics said it made them feel valued and affected their buying decisions. This synergy being created between retailers and customers through gamification underlines the significant opportunity it presents to businesses within the banking and finance community.”

Why have we seen a rise in gamification?

Gamification is rooted in psychology – creating challenges and competitions around saving, budgeting, or learning about finance. It taps into the fact that humans enjoy meeting the goals they set for themselves, especially financial goals. Therefore, people are more likely to meet their savings goals if a finance app or bank taps into their internal reward psychology.

Tom Fairey, CEO and Founder of Stakester, comments: “Gaming is a very broad term, and it encompasses lots of different experiences. But what they tend to have in common is that they’re immersive experiences where players are comfortable spending real money to gain an advantage, heighten their emotions or unlock previously inaccessible content.

“This year, it’s expected that players will spend $196bn (£168bn) on games, so it’s a huge opportunity for fintech to offer solutions that allow players to do that frictionlessly, in a way that doesn’t compromise the experience and creates an environment that players are happy with.”

The finance world can seem inaccessible, difficult, and confusing at times. This coupled with the fact that user attention spans are decreasing causes financial services to fight for consumers in unconventional ways. Gamification can make a tedious and dull sector easier to understand and more exciting to the average person. For example, Digit – an app that lets users digitise their savings – has claimed that it has helped users save more than $5bn (£3.9bn) through gamification.

Will Blackmore, Technical Director at Engage, a digital specialist services agency, comments: “I think gamification’s rise has a lot to do with how much more accessible the world of finance has become in recent years. Challenger banks with a different take on what makes a good service have paved the way with tools to help us understand our finances.

“Now Open Banking is allowing us, and in turn third parties, to integrate multiple services together. These businesses are using gamification to support their customers and help them make good decisions while also encouraging responsible spending. Anything that can have such a positive impact is going to be popular.”

Whereas Giuseppe Caltabiano, CEO of EverUp, feels gamification has risen due to consumers lacking an emotional connection to their banking habits. He comments: “Financial services are low-engagement products. The majority of customers do not get excited by what they earn from interest rates and cash-back offers. Today customers expect financial services to offer personalised experiences that are fun, engaging and rewarding.

“According to CapGemini, nearly half of respondents in their 2022 Voice of the Customer survey said their banking relationships were neither emotionally connected nor well-integrated into their lifestyles; 52% said banking was not “fun”. Gaming and gamification address a fundamental human desire – our need for instant gratification. Gaming enables a financial services experience that channels our impulsive and emotional thinking into better financial behaviours”.

Is gamification here to stay?

Will Blackmore believes gamification has been here for longer than we realise, and will be used as a tool to encourage responsible saving and education. He comments: “Gamification isn’t a phase. In one form or another, I think gamification has always been a part of finance. Take loyalty schemes like Nectar and Avios, for example. They have been rewarding spending with points for decades. In my opinion, the word Gamification is simply a modern take on an existing practice.

“With all aspects of personal finance becoming more and more integrated, I expect to see more services take into consideration the full financial spectrum, from current accounts and S&S to ISAs and Mortgages. This should see services use gamification as a force for good to demystify and encourage good decision-making based on the significant amount of information that we have available to us.”

Giuseppe Caltabiano, CEO of EverUp, believes that gamification is here to stay as younger generations drive consumer habits in the financial world and look for ways to save more efficiently. He comments: “I believe the gamification that drives positive financial behaviours is here to stay. Unlike the older generations, Millennials and Gen Z need to be engaged to participate.

“They are banking nomads driven by engagement and positive experiences. To retain them and build a lifelong relationship, financial services firms can’t look at them as one-time transactions but need to keep them engaged throughout their lifetime. Gamification, gaming and the offer of meaningful rewards can help achieve this.

“In the future, gamification will be increasingly embedded into financial services to drive positive behaviours while evoking a sense of accomplishment, social influence, empowerment, instant gratification and success among users. I also expect to see more immersive experiences being offered, generating higher levels of engagement, loyalty and retention, while also deploying gamification to educate people and improve financial literacy in a fun and engaging way”.

Tom Fairey believes that the emergence of gamification will particularly aid education around crypto. He comments: “This is the new normal for gaming, whether you’re looking for custom content, a heightened experience or trying to actually make money. The process is only going to get more innovative, with fewer barriers. We’re already seeing this now; when paying for a mobile game add on or entry with Apple Pay, you don’t have to leave the app and all you need is a face ID – it’s hard to imagine how it can get any easier than that, but fintech is super innovative!

“Some finance businesses even have the opportunity to introduce games/gaming into their user experience. If you look at services like Monzo, which have a much more user-friendly aesthetic and more relaxed tone, they have this huge ability to engage with games as it won’t impact trust from their users. Of course, one of the main areas that fintech can capitalise on is the emerging metaverse; there is already a company, YGG, that rents out in-game NFTs to “Axie Infinity” players and takes a cut of any profits they earn, whilst educating them on all things crypto and NFT.”