One of the great trends in business delivery models in various industries right now is gamification. However, some are sceptical of the use of this model within the financial services sector. With this in mind, we are going to explain what gamification is when applied in the field of finance and how fintech companies can use it.
What is gamification?
Gamification is the application of game-design elements and principles in non-game contexts. Some elements that are included are scoreboards, competitions with others and rules of the game. Another definition can be the set of activities and processes that help solve problems using features of a game. Gamification is generally used to improve user participation; increase productivity; improve learning processes, increase customer loyalty, train and motivate employees; improve health and wellness; promote personal growth; manage innovation, among many other benefits.
Every year, companies that use gamification can gain a huge competitive advantage. According to the study “Playing for keeps: CRM Gamification Encourages User Adoption”, companies that use gamification increase their income by 8.5%, compared to companies that do not use gamification that only increase their income by 4.4%.
Digital loan companies are a recurrent example of gamification in the fintech sector which by applying game design allows players (those who request a loan) to access better credit conditions. These digital financial services companies design their products based on a series of levels, which can be called the “confidence ladder”, where all players start at level one. So, every time they go up, they unlock better conditions, such as a lower rate, a longer term to pay and a larger amount.
How is gamification disrupting the traditional financial market?
Lately, banks are under constant threat. Competition from fintech companies, capable of adapting quickly and incorporating the latest in digital innovation, has forced banks to reinvent their customer service. Regulatory changes, such as the PSD2 (the new European payment regulation that arrived in 2018), have also contributed to the evolution of the banking sector in an environment that is increasingly difficult to control.
To redefine and expand the role they play in the lives of their customers, many banks have turned to gamification, transforming tedious banking activities into an experience more in line with today’s consumer preferences. Banking activities are perceived by most consumers as boring.
Partly, says Mike Kernot of UK research consultancy BRDC Continental, customers hold this perception because “the benefits of a good financial product aren’t immediately apparent.”
Faced with this situation, many banks have chosen to use gamification to reinvent the design and experience of digital banking. Gamification is the process of integrating, into something that already exists, the mechanics of the game to motivate participation, engagement and loyalty. Through a progressive rewards system, consumers are engaged through the following general categories:
- Points: They serve as exchange currency or to monitor progress.
- Rewards: a goal or milestone that gives meaning to active participation. In this way, they ensure that users do not lose interest.
- Badges: a recognition that is used as an incentive for the fulfilment of certain tasks and for achieving specific objectives. It can be used to publicly display the goals achieved.
- Leaderboard: Encourages competition, which can lead to higher engagement and recommendation, as users enjoy sharing their achievements.
The use of gamification in the financial context was driven by the sum of several factors, such as the evolution in consumer preferences and their desire to use tools that fit better into their daily lives, which today translates into digital tools. Overwhelmed by the large number of regulations that frame the operations of traditional banks, fintech has been very useful in responding to the needs of consumers in terms of digital financial services, with exceptional customer experiences.
Gamification is tailor-made to encourage customer engagement. It creates “an emotional connection with users,” says digital marketing expert Germán Di Carlo, and this can “lead to a longer relationship compared to just brand awareness.”
Gamification is a very powerful tool to generate a pleasant experience supplying greater benefits to the user. Likewise, it allows companies to generate greater commitment and loyalty.
With access to different technologies being within reach for many people, it is becoming easier to offer great gamification experiences to consumers. Therefore, there will be a higher level of demand from the generations that have no recollection of traditional experiences with the fintech products that exist today. Likewise, this technology will also facilitate access to people who had never previously used digital financial services.