By Jeff Snyder, Founder and Chief Inspiration Officer, Inspira Marketing Group
More than 3 billion people in the world play video games, according to Statista, and this trend has led to the growing popularity of gamification business models in banking. Gamification is forecasted to increase at a compound annual growth rate of 26.5% through 2027, and companies that adopt it see up to a 700% increase in conversion rates.
Gamification is the process of creating incentives that reward users for specific activities. In banking, you might “gain levels” — like you would in a video game — every time you transfer money to your savings account, a retirement account, or an investment portfolio.
Users might be given “quests” by their mobile banking apps asking them to perform certain behaviors to earn points and gain levels. These quests incentivize behavior such as signing up for financial programs, checking a bank account more often, and turning on notifications. Banks could even incorporate leaderboards to encourage competition amongst users.
This gamification increases customer engagement while encouraging healthy financial habits. Startup fintech apps such as Robinhood scaled based on financial gamification, and it only makes sense that banking apps would jump on board. In an age when mobile technology brings the power of the internet with us everywhere we go, gamification provides a reason for people to keep their minds on their money.
Giving people what they want
Even before the pandemic, brick-and-mortar banking was on the decline. According to the Federal Deposit Insurance Corporation, the United States had more than 8,000 FDIC-insured commercial banks in 2000, with that number dropping below 4,200 by September 2022. In addition, these trends accelerated in 2021: A net of over 2,900 branches closed that year, with Wells Fargo & Co. leading the pack at 267.
However, gamification incentivizes customers to interact with financial institutions they might have never visited otherwise. More people than ever use mobile devices, and there will be an estimated 216.8 million digital banking users in the United States by 2025, according to Statista. It’s especially true of younger generations, as 99% of Gen Zers and 98% of Millennials use mobile banking apps for a number of tasks, according to Chase’s Digital Banking Attitudes Study, as reported by CNBC.
This makes mobile devices the perfect medium for financial institutions to implement gamification features. Of course, you’ll need to figure out what and how to gamify within your app.
Types of gamification used in digital banking
Gamification comes in a variety of forms. It can be as simple as celebrating actions such as opening a new account, giving points and levels to users, or even providing real-world cash and prizes. You can create quizzes and countdowns, power-ups, options to team up or compete, and more.
PNC Bank, for example, created a cartoon piggy bank that helped gamify saving money in its “Punch the Pig” feature in the mid-2010s. Whenever users want to add more money to their savings accounts, they can tap the virtual pig to instantly transfer funds in a feature that is still alive and well in 2022. It’s a simple way to make a mundane task actually fun.
Spanish bank BBVA deeply supports gaming and has come up with several games over the years, including BBVA Game, a platform that lets customers watch educational videos to be entered to win music downloads, movie tickets, or tickets to BBVA La Liga football matches. The incentives help push customers through BBVA’s funnel to learn more about its products and expand their banking needs.
Ally Bank took things a few steps further with an augmented reality Monopoly game in October 2019. Produced in collaboration with Inspira Marketing, this partnership with Hasbro created oversized virtual tokens and property spaces in six United States cities hosting AR scavenger hunts for prizes such as a new Jeep Wrangler and $50,000 in cash. Ally launched the program after conducting a survey that found more than one-third of Americans first learned about money by playing such board games.
In fact, most Americans have played a money-related board game, especially as children. Those games contribute to our financial literacy and ability to make decisions with finite resources. It’s no wonder financial institutions are rushing to build a bridge between gaming and financial health. Of course, that’s easier said than done.
Gamifying the banking experience
Just because gamification is effective does not mean every implementation will be. Even actual video games have their share of controversies when money gets involved. Terms such as “Pay to Win” are used to describe games where fun is eschewed in favor of cash grabs through a series of in-game microtransactions.
Banks hoping to take advantage of gamification in their business models should follow five best practices to ensure it is successful:
- Simplicity is key.
It’s important to make the game easy to play. Banking is already confusing to the average person, and the point is to simplify the experience rather than make it more complex. Gamification elements should be easy to find and easy to see but not so ubiquitous that it harms usability. This gives people the option of choosing whether to participate.
- Don’t overwhelm people.
Don’t overdo it with notifications, or customers can get annoyed and disengage. People have the option within their phones to disable app notifications, and you don’t want to annoy anyone to the point they either silence or uninstall you.
- Serve a real purpose.
Prioritize clarity and purpose over fun. No one is ever going to find a banking app as interesting as a true mobile game. Still, gamification elements that encourage and reward smart financial behavior will produce the dopamine rewards that keep customers coming back.
- Leverage the data.
The best part about having a native mobile app that people are engaged with is that they are more likely to provide access to personal information you don’t already have. Use the data obtained through gamification as research to analyze, understand, and improve the customer experience.
- Build a virtual economy.
Just like in the real world, you must build a sustainable economy to keep users engaged in your game. Use scarcity to incentivize engagement, such as temporary contests and seasonal rewards. Over time, this will keep people engaged long term and make them more open to the content pipeline you feed into the gamification funnel.
People love playing games. Generations before electronics came about, we had a variety of card and board games. Video games are continuing to grow in popularity, and the industry is larger than most other forms of entertainment. Applying elements of gamification to digital banking is an obvious move to leverage our natural instincts for everyone’s benefit.
Adding gamification to digital banking incentivizes positive actions. It can make mundane actions — such as saving money — more fun and keep people coming back. Gamification has proven to be a successful model that can exponentially increase customer retention and engagement in banks that leverage it.
That’s why it’s the next level of digital banking. It can be as simple as creating an appealing character to setting up tournaments and leaderboards with seasonal special events. Just be sure to introduce gamification elements that make sense for the business and customer. If you do, you could build stronger customer relationships and feed growing revenues over the long term.