What is Gamification in Banking?
To understand gamification in banking, let’s start by understanding what gamification is.
The answer is in the word. Gamification is when elements of gameplay are introduced to a set of events.
What do we mean by elements of gameplay? Well, these are all the things we love about games without even realizing it – rulemaking, engagement, fun, rivalry, and entertainment.
What does this look like in banking?
Today’s busy customers are finding it harder to carry out the most basic account actions. So, being encouraged to do these tasks as part of a game is a powerful motivator.
Gamification in banking contains key areas that you will see in the application of the idea.
This article will discuss these key areas:
- The benefits of gamification in banking.
- Some useful gamification strategies.
- Examples of gamification in action.
- Challenges to wider adoption.
The article will also attempt to investigate the future to see what is to come for gamification in banking for those who embrace it. We will tell you how to achieve this.
The Benefits of Gamification
Games have always appealed to humans. As social creatures, we thrive on entertainment, social interaction, competition, and reward.
Gamification uses these attractive sensations to get banking clients to do what game creators want them to do.
Using these game-like elements to excite and engage banking audiences, companies can get their customers to act in a gamified way when it comes to their banking matters
These are some of the known benefits of gamification in banking:
- It engages and motivates the customer base
- It can turn a boring or repetitive task into a fun one
- It can change mass behavior by consistently rewarding certain actions
- It can encourage the audience to advance their levels within the game
But what is the goal of all this? In real terms, this is what a gamification program could yield for a bank:
1. Gamification as a strategy to get new customers
By incentivizing actions like sign-ups and referrals, banks can expand their customer base as they attract more game players and turn them into customers.
Customer acquisition through traditional channels such as marketing is expensive and highly competitive. Gamification adds a new method of customer acquisition.
2. Gamification as a method of customer retention
Banks know that new customer acquisition is important, but customer retention should never be taken for granted. The book Marketing Metrics estimates that the chances of selling a product to an existing customer are 60-70%, but only 5% when selling to a new prospect.
Gamification builds customer loyalty by helping customers find easier and more consistent ways to do hard things like making regular deposits.
They will find it an easier decision to stay with a bank that helps them bank better.
3. Gamification to help customers reach their goals
Different customers have their own goals, be they savings, investing, managing their money to stay out of debt. Gamification helps nudge clients to become consistent in ways they would otherwise not have.
For example, introducing a savings leaderboard could alert customers to how well or badly they are doing in terms of savings.
Introducing gamification in banking could get customers to do these often-neglected tasks that are the basis of good financial management.
4. Gamification can get useful customer insights
Through gameplay elements, banks can show customers their habits in graphic dashboards. This information can easily highlight the behavioral shortfalls that clients are facing.
If insights are presented to customers in interesting and engaging ways, customers can be nudged to correct their behavior.
If overspending is the problem, a customer can act from a graphic that shows how much of their money goes on non-essential purchases.
5. Gamification can keep your house in order
One neglected element of gamification programs is that they can help banks keep their internal house in order.
Banks are subject to lots of regulation and have internal issues around record-keeping and compliance. Maintaining an up-to-date CRM (Customer Relationship Management) system for KYC (Know Your Customer) purposes is a problem banks share.
Gamification can help this by motivating modern digital customers to keep their personal banking information in order. This is not the main reason to start a gamification program, for sure, but it’s a benefit that banks can’t ignore.
Gamification Strategies in Banking
Banks can use gameplay elements to engage with busy customers and prompt them to act in a certain way.
Receiving a helpful nudge based on gamification principles can end with mass behavioral change. Here are some of the main reasons why gamification works on the human psychological level:
Extrinsic motivators are rewards that make customers want to keep up to date with an action that is not rewarding by itself. The reward comes when these markers can be converted, like when points yield an actual reward like a free coffee.
These motivators could be:
- Leader boards
Intrinsic motivators cause deep internal satisfaction.
It’s not an actual reward, but it makes the customer feel better because they have achieved something that takes great focus to achieve.
This could be:
Banks use smart combinations of each of these psychological triggers to craft their gamification programs.
The following items can all be found in the toolkit of a good gamification system:
- Rewards. Banks will give points rewards that can be converted to monetary rewards if clients perform certain tasks.
- Competition. By knowing that they are part of a league, customers derive value from striving to do well in the league. This helps get customers moving.
- Points awards. Points are a constant validation that the customer is doing something right. A steady drip of regular points that leads to an end goal is better than one huge annual goal.
- Assigning spend value to points. What good are points if you can’t use them? Banks can commodify points and allow them to be used as currency.
- Keep the game winnable. If the game is easy to win, this keeps players interested and does not discourage them by being too hard.
- Allow them to tell their friends. Social proof is a large part of human psychology. People love to tell others about what they are doing. This has the added benefit of giving the bank extra exposure and attracting more customers.
- Insert educational options. If a bank really needs to get an educational message across, they can build in their educational program into the progress levels of the game.
- Promote new services. Remember that it’s 60-70% easier to sell to existing clients than to new ones. Banks can insert new services into their games.
Examples of Gamification at Play
Several banks and financial institutions have already used gamification with great success:
1. BBVA Game
This Spanish bank won the Bank Innovation Award in 2013 and gathered an impressive 100,000 game players in just six months.
The game was based on a points system that allowed users to win prizes like sports tickets or music vouchers. In time, they added other elements to the game that were more banking-focused, such as savings and budgeting tips.
The game was exciting and engaging and allowed customers to run the game as they would a bank account. Customers could perform regular tasks like pay bills, but the pay environment was loaded with points and rewards at every turn.
2. PNC Bank’s Punch the Pig game
Based in the US, PNC Bank introduced a Virtual Wallet, which was a hybrid of their checking and savings accounts. Customers could move their money between different accounts for varying purposes.
Sometimes they would need it for normal spending, and sometimes short or long-term investments. The game introduced a Money Bar feature which showed customers how much free money they had to spend.
In a clever turn, the game initiated a money-saving mindset by adding a feature called Punch the Pig. To Punch the Pig that appeared on the screen, customers had to transfer a certain amount of money into their savings account first.
3. Extraco Bank’s account conversion app
Extraco Bank risked upsetting its 145,000 customers when it decided to phase out free checking accounts. To ease customer unhappiness, the bank rolled out a game that explained to customers how losing their free checking accounts gave them bonus banking.
Customers had to go through several questions about their spending habits. In this process, the game explained how customers could reduce their own fees by making online bill payments or direct deposits.
Rather than use the tried and trusted explanation letter format, the bank was able to realize account conversion rates that were seven times higher than normal.
Challenges to Wider Adoption
As with every process, there are some risks to gamification. Some of the challenges to adoption come when banks must decide which element of human psychology to leverage.
Humans enjoy winning and generally dislike losing. But choosing the right buttons to press can have its challenges.
The biggest wins of a banking game are that it encourages the desired behavior. If the program is not designed well or is received badly by the market, it can be an expensive distraction. Here are some reasons why full adoption of gamification can be slowed down:
- Players can manipulate the system. Opportunistic players can use the game to their own benefit in order to cash in on rewards. This leads to zero-sum competition. This would be a massive waste of time and money and even set you back in other areas.
- The user experience can be poor. This is not the fault of the game designers. In some markets, there is an inconsistent internet connection which would make an otherwise interesting game a buggy and annoying distraction.
- Games can be addictive. When creating a game, banks must be careful that the game is not too immersive, or it could be said to be manipulative or exploitative. This can surface tough ethical questions.
The Bottom Line
When done well. Gamification can be a boost to a bank by energizing its customers.
Banking can be serious and stuffy at times, so there is no harm in making it exciting and enjoyable. This will lead to greater customer engagement and loyalty.
By bringing down the wall of seriousness, banks can be more customer-centric and they can forge stronger and longer-lasting relationships. The world is going more virtual and digitally immersive, and gaming programs are here to stay.