Gamification has become a popular buzzword in recent years, and for good reason. Gamification is the process of taking aspects of games and applying them to non-game tasks to make them more engaging or fun. This can be done in various industries, but it seems particularly well-suited for the banking and financial services industry. Let’s discuss why the financial industry is ripe for integration with gamification and what changes can be made in modern banking to accommodate a shift towards gamification.
Why is traditional banking ripe for gamification?
The banking and financial services industry has been historically resistant to change. This is understandable, to a certain extent. After all, when people entrust their hard-earned money to a bank or financial institution, they want to be sure that those institutions are using tried-and-tested methods that have stood the test of time with evident results.
However, this resistance to change can also lead to stagnation and a feeling among consumers that their bank or financial institution is not keeping up with the times. This can induce a lack of confidence in the financial institution, especially among young customers who prefer a financial services provider in tune with the times.
In addition, the banking and financial services industry requires a great deal of trust from consumers. For people to feel comfortable entrusting their money to a bank or financial institution, they need to feel like that institution is looking out for their best interests. Here are some other significant reasons why the banking and financial services industry is ready for gamification.
Bank customers are accustomed to using numbers to track progress
Finally, the banking and financial services industry is ripe for gamification because it is an industry where people are already accustomed to using numbers and tracking progress. For example, many people track their credit score or the balance in their savings account.
Gamification can help banks and financial institutions tap into this existing mindset and use it to encourage customers to engage in activities that will benefit them financially. For example, a bank could offer its customers the ability to track their progress towards saving for a down payment on a house or retirement. This would give customers a sense of accomplishment as they watched their progress grow over time.
Competition from neobanks
In recent years, there has been a rise in the number of neobanks, which are banks that exist entirely online. These neobanks have benefited from not being bogged down by the same legacy systems and resistance to change that traditional banks face.
Furthermore, these neobanks are cheaper than traditional banks and financial institutions because of the low overheads. Expenses like renting premises for branches, installing ATMs and paying salaries to thousands of bank tellers are just some of the costs that neobanks don’t incur, enabling them to offer their services at a much lower rate than traditional banks.
As a result, neobanks have been able to lure customers away from traditional banks with the promise of lower fees, better customer service and a more modern banking experience.
To compete with neobanks, traditional banks and financial institutions will need to start offering a more modern banking experience that includes gamification.
Low bank interest rates over the last decade
In recent years, bank interest rates have been at an all-time low. This has made it difficult for banks to operate effectively since the reduced interest rates mean lower profits.
Banks have started charging their customers higher fees for services to make up for this loss in profits. Unfortunately, this has led to a feeling among bank customers that their bank is nickel-and-diming them.
Banks need to find a way to reduce the negative perception that their customers have of them. One way to do this is by gamifying the banking experience.
For example, banks could offer their customers rewards for using their credit or debit card. These rewards could be in the form of points that can be redeemed for cash back, gift cards or other prizes.
Another way that banks could gamify the banking experience is by offering games that teach financial literacy. For example, these games could be used to educate customers about budgeting, saving and investing.
The cradle to grave mentality
For a long time, banks have operated in a manner very similar to religions and churches. You are often born into a religion, and you stay there until your final days. That is how the bank customers of the older generations banked. However, with the increased mobility of labor and the influx of banking options, today’s customer has multiple bank accounts across various banks and is not loyal to any one of them.
The modern customer is looking for a bank that will give them the best interest rates, the lowest fees and the most convenient banking experience.
Banks need to start offering their customers more than just traditional banking products and services to keep up with this trend. They need to find ways to gamify the banking experience in order to keep their customers engaged and loyal.
Gamification is the way forward, especially in the banking and financial services industry. By gamifying the banking experience, banks will be able to increase customer engagement, loyalty and retention.
The growth of the millennial customer base
Millennials are now one of the most prominent consumer groups in the United States and indeed globally. And unlike the older generations that favored function over experience, millennials need to be engaged to participate in any industry or activity. As a result, they don’t suffer boredom unless there is no other option.
This is why banks need to start gamifying the banking experience. By doing so, they will be able to engage with their millennial customers and offer them a banking experience that is modern, relevant and fun. This is the only way to stem the flow of millennial customers from traditional banks to neobanks which offer convenience and a unique user experience with their highly customizable features.
What changes need to be made for gamification to work effectively in the banking and financial services industry?
For gamification to work in the banking and financial services industry, a few changes will need to be made.
Offer more than traditional banking and financial services
First, banks will need to offer their customers more than just traditional banking products and services. They need to find ways to gamify the banking experience in order to keep their customers engaged and loyal.
With gamification, banks can offer customers rewards and other incentives that can drastically increase engagement and customer retention. For example, one incentive that can easily be gamified is financial literacy.
Banks can offer their customers games that teach financial responsibility and good personal financial practices like budgeting, saving and investing. These games could be used to educate customers about personal finance in a fun and engaging way. An excellent example of this is Long Game which was recently acquired by Truist. Long Game teaches financial literacy, specifically saving, in a fun and engaging way.
Prioritize the customer journey and experience
Banks need to start focusing on the customer experience as a way of retaining their customers and attracting new ones. They need to find ways to make the banking experience more convenient, fun and engaging. This can be done quickly by leveraging the Octalysis Framework.
The Octalysis Framework is a tool that can be used to gamify the customer experience. The framework has eight core drives that can be used to engage and motivate customers. By using the Octalysis Framework, banks will be able to increase customer engagement, loyalty and retention.
If banks could leverage some of the core drives of the Octalysis Framework like offering clients Epic Meaning (Core Drive 1), a sense of Accomplishment (Core Drive 2), Ownership (Core Drive 4) and Social Influence (Core Drive 5), they would have a level of customer engagement that would be a new standard in the banking industry.
For example, if banks could gamify saving for their customers by creating groups within their customer base that can save together and compete with other savings groups. This could satisfy several Core Drives on the Octalysis Framework like Accomplishment, Social Influence and Empowerment. Customers will keep returning because they have formed a valuable community within their bank and are meeting their savings targets in a fun way.
This is essentially what Robinhood did for the Reddit users who colluded to influence Wall Street stock prices. It gave them a community with which they all had more power to influence the stock market than they would have had individually. Furthermore, it gave them a sense of Epic Meaning (Core Drive 1) in that they were taking on the man and were changing how low capital investors could invest on Wall Street. While what they were doing was ultimately illegal, the banking and financial services industry can learn a lot from that ‘millennial uprising.’
Transpose cradle to grave approach to digital banking
The banking and financial services industry is currently undergoing a digital transformation. This transformation offers banks the opportunity to change how they engage with their customers by gamifying the customer experience.
Banks need to start thinking about their customers as lifelong members and not just one-time transactions. They need to find ways to keep their customers engaged throughout their lifetime. One of the ways they can do this is by offering meaningful rewards for continuous engagement.
Are you interested in learning how your bank or financial institution can increase its customer engagement and loyalty through gamification? Contact us for a consultation today to get started.