A vast amount of research shows the critical importance of play in children’s social development and learning. Indeed, studies on mammals have shown that play changes the connections in the neurons in the prefrontal cortex, an area associated with emotional regulation and problem-solving. It also affects the release of oxytocin and dopamine, two chemicals that impact brain activity. Most adult learning occurs in more formal settings, yet some forms of play are proving successful in enhancing learning and driving desired behaviors. This realization is at the heart of gamification.Gamification — the introduction of game-like features into mobile apps to drive engagement — has taken the world by storm. Mordor Intelligence estimates its current market size at $15B and expects that number to more than triple by 2029. Although the use of gamification in financial services is nothing new, several factors are leading to an acceleration of gamification in banking. These include the increased use of mobile banking applications, insights from behavioral economics on habit formation, advances in data analytics and artificial intelligence (AI), and the exponential rise of cloud computing.Elements of a Successful Gamification StrategyA successful gamification strategy is based on four fundamental principles:
- Clear narrative. Crafting a narrative provides users with a compelling incentive to become invested in the experience. Advancing the storyline encourages continued engagement.
- Interactivity. A high level of interactivity allows the organization to guide its customers through the desired activity while leaving them in control of their journey, increasing engagement.
- Feedback. Offering timely and relevant feedback to users on their progress helps direct them towards their goals and ensures they don’t abandon the task.
- Rewards. The use of rewards for reaching a milestone — such as points, badges, or cashback — reinforces positive behavior and incentivizes users to work towards the next task.
Of course, using gamification is not without challenges. For users to trust you with their finances, it is important to maintain a balance between fun and seriousness. Be aware that some elements of your application may not benefit from being gamified. Overgamification can pose a reputational risk. What’s more, appealing to different audiences and sustaining their engagement over time can be difficult. Community financial institutions (CFIs) should design features that resonate with their target audience and continually refresh and develop these features to maintain interest.Gamification Applications for CFIs Gamification is transforming the banking experience in many ways. We explore three applications that could be of interest to CFIs.
- Customer onboarding. Research shows that one in four potential banking customers drop out during onboarding, mostly because of the multiple steps required to complete the process. Introducing gamification into the onboarding experience could dramatically increase positive outcomes. Interactive tutorials to guide customers through the process, progress tracking, personalized recommendations, and rewards for completing tasks ensure customers remain engaged and motivated to advance more quickly.
- Employee training. According to TalentLMS, employee motivation rises from 28% in a non-gamified environment to 83% when gamification is incorporated into their training. The use of quizzes, challenges, realistic simulations, competitive elements, and rewards leads to increased engagement, better knowledge retention, and understanding of complex banking concepts.
- Managing personal finance. Incorporating game-like features into banking apps can help encourage healthy financial habits. Features such as goal setting, budgeting, and incentives can empower customers to take control of their finances and achieve their financial goals. For example, users could earn points or cashback rewards for saving money, making on-time payments, or reaching specific financial milestones.
Naturally, such an upgrade to the user interface can be expensive, but it doesn’t have to be the preserve of the banks with the largest budgets. Partnering with a fintech could give CFIs quick access to gamification features without a hefty bill. One FI to choose this route is First United Bank & Trust in Oklahoma, a bank with $14.5B in assets, which partnered with a fintech to deliver personalized financial advice in a gamified environment. The launch was remarkably successful: a 44% adoption rate within 120 days and substantial increases in savings and new accounts. "Our partnership with Personified has been invaluable, not only in providing our customers with meaningful value and supporting their financial well-being and goals but also as a proven deposit growth strategy for our bank," said Greg Massey, Chairman and CEO of First United.As competition for customers becomes fiercer, gamification can offer CFIs new ways to boost engagement and build loyalty. It can help make processes such as customer onboarding, employee training, and managing personal finances more enjoyable and rewarding. When developing a gamification strategy, don’t lose sight of your business objectives and follow the key principles of gamification: narrative, interactivity, feedback, and reward.
