Games are no laughing matter when it comes to money (investments and savings), in fact, they are serious business. Banks believe that games or more precisely, gamification (that is, the use of engaging gaming mechanisms to modify the behavior of individuals) will lead to improved investor loyalty and better investment outcomes.
+2 The serious business of gamification
Gamification can allow wealth managers to add value to the value chain, including product development, marketing and customer education. More importantly, gamification can establish trust within the investor-advisor relationship by increasing transparency, sharing investment decisions and reducing the asymmetry of information regarding financial markets. As such, it allows investors to have a training or simulation objective in a virtual environment that reproduces a potential situation. Through the collected experience, an investor can anticipate and act on the effects of market fluctuations. Testing different investment strategies against risk tolerance levels, creating probabilistic scenarios to drive wealth allocation, taking into account essential goals and environmental causes, are all elevating the expectations of customers. Gamification can be applied to mass affluent, high-net-worth and institutional relationships. For example, insurers or pension funds could use gamification to help their own investors build a stronger connection between their finances and their real lives.
+3 Where do the traits of gamification lead us?
Understanding the end-investor’s goals and their actual risk tolerance is of great importance, however, people are not ready to spend hours filling in questionnaires. On Alkanza’s platform[1] the user sees a deflated balloon that they need to inflate. As they click, the balloon inflates and the user gets some points. To show the user’s risk tolerance, they have to release the balloon before it becomes overinflated and bursts. The number of points on release shows the user’s risk tolerance. If the balloon bursts, the user loses all the points. If you’re a risk taking person, you’re going to try to maximize the number of points even though you’re taking the risk that the balloon is going to burst and you’re going to lose all those points. If you’re a risk-averse person, then as soon as you get a few points you’re just going to put those points away and release the balloon. Alkanza believes that people intuitively show their actual risk tolerance when playing this game, whereas if they were being asked a question they may not understand how to answer, especially if they have never invested money before.
Sun Life Financial[2] 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. The game challenges employees to learn and earn more by completing levels and missions that encompass important retirement and investment planning steps. It essentially requires players to pass levels by demonstrating financial knowledge. The game generally appeals to younger members who are accustomed to quick feedback and tech-based learning. Such digitally powered offerings could help wealth management services providers attract younger clients.
+4 Shifting business models in the financial landscape
Looking at consumer patterns today, membership cards and discount clubs are of high popularity – according to COLLOQUY’s 2015 study[3], American households hold memberships in 29 loyalty programs spread among the retail, financial services, travel and various other economic sectors. And these loyalty programs are profitable for the companies – an Accenture study[4] in 2016 found that customers who are members of loyalty programs, such as frequent flier clubs, generate between 12 and 18 percent more revenue than non-members.
+5 Millennial money – interested in saving, not investing?
In 10 years, more than 50% of the global HNWI wealth will be controlled by the Generation X, Y & Z clients. But only 24% of millennials demonstrate a basic financial knowledge[5], as a result this multigenerational wealth transfer sets the real challenge to bring wealth management to those customers who lack existing wealth or investing savvy. Making investment both fun and cool could revolutionize wealth management and set the scene for disruption.
IM’s app, My Future[6], was developed with the help of Nintendo gaming experts to engage next generation investors and help them understand the benefits of financial planning. The gaming-style tool shows users what income they can expect when they retire and when their money might expect to run out under different scenarios. It can present a stark picture of a poor retirement for clients although this then serves as a prompt for advisers to discuss how to solve some potentially difficult problems.
+6 Congratulations! – The perfect achievement system
An achievement system adopted from multiplayer games could bring breakthrough. According to Mediakix[7] and Statista[8], there are 2.1 bn mobile gamers worldwide and 56% of them play more than 10 times per week. This crushing gure tops the number of Facebook users (2.0bn, 2017), which clearly indicates the affinity people have towards playing games on their phones. Collecting badges, earning trophies, levelling up – these are huge factors in these games being captivating and addictive.
Financial institutions and wealth managers can use it to increase customer engagement, satisfaction and loyalty, while motivating their clients to make financially responsible decisions. Clients can earn achievements and trophies, which they can turn in for rewards: a month of free management fee or a premium deposit for example. The time has come for banks to start using tools that proved themselves extremely useful in other industries.
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