Gamification in FinTech: A Passing Fad or Here To Stay?
Updated: Dec 21, 2023
New Year is coming soon and it’s that time of the year when people gear up to make their NY resolutions. Talking about resolutions, do you know that one person who starts hitting the gym on January 1st, scrambles around for a month doing all those weights, cardio, and calisthenics, and come January 31st, he or she is all done? No more motivation, no more gymming, bye-bye NY resolution and see you next year.
New Year is coming soon and it’s that time of the year when people gear up to make their NY resolutions. Talking about resolutions, do you know that one person in your life who commits to saving money from January 1st, does this for a few months and then drops the ball? No more saving, no more rainy day funds, bye-bye NY resolution.
I had a friend like this not too long ago, who was motivated to start saving and signed up for a finance management app but forgot to put his entries a few months later. But he didn’t discontinue using the app because of demotivation. It was because the finance app (let’s call it X) failed to keep him motivated enough to continue his savings.
After doing a bit of research, I gathered that psychologically, users cannot be motivated by just awarding badges, appreciation messages, and customer loyalty programs. At least one of the following outcomes are required for gamification:
Ability to use reward points for real-life expenses or purchases, which will push up the incentive of doing an activity.
Ability to obtain satisfaction for contributing to something large. For example, running towards a social cause.
Ability to feel a sense of competition among other groups of users. When the chips are down, competition is a huge impetus to get the spirits back up.
Ability to learn with simple educational content. Simplicity is at the crux of gamification of any user interface - the easier it is to learn, the better the user engagement.
The global Fintech sector, which is expected to skyrocket to $1.5 trillion by 2030, has already seen the implementation of gamification in the last few years.
However, there is still skepticism that gamification is just a passing fad and is not here to stay. Let’s talk about this and look at both sides of the coin.
The Rise and Evolution of Gamification in Fintech
Early on, gamification in Fintech came in a big bag of bouquets and brickbats, with proponents driving the dialogue toward widespread usage across applications and clients, and the opposite side having strong pushbacks against the concept of incentivisation.
Ultimately, gamification ended up being a game-changer in user engagement and promotion of financial literacy. A first-mover example here is Robinhood, which opened a portal into stock trading for gamification. If you’ve ever tried it (you must!), you’ll see that the company made investing more accessible and engaging by offering users free trades and deploying hook-worthy mobile interfaces. What I liked most about the app was the clever use of push notifications, leaderboards for winning stock picks, and confetti animations once a trade is made. This kind of gamification chimed strongly with the tech-savvy younger audience, providing a huge springboard for the rise in the app’s user base. Their customer loyalty program through crypto is another impressive one.
Intuit Mint is another intriguing example of gamification in its nascent days. The personal finance management tool offered spend tracking and goal setting and provided rewards for financial achievements. Mint encouraged users to strive for “financial badges” such as increasing savings and lowering debts. Well, what do you know? When personal finance becomes a game where users compete against their past selves, it greatly improves financial literacy.
What gamification did in Fintech, was it harnessed psychological principles to push users to learn and practice financial management.
Why Gamification Gained Popularity Later On
Due to two core reasons, gamification catapulted in its popularity in the Fintech space. First was the expedited need for user engagement in a sector that deals with extremely complex financial products and services. Point systems, progress bars, and real-life rewards make these apps more consumable and enjoyable for users of various groups. It also helps hugely in user acquisition, as was the case with IndiaLends.
Secondly, the role played by behavioral psychology. Drawing from insights such as instant gratification, social validation, and reward capturing, gamification can nudge users toward specific actions. Humans naturally seek achievement and competition and this is exactly what Fintechs have been able to tap into. It’s kind of a strategic blend of technology and psychology that enhances user experience and drives loyalty.
Arguments for Gamification Being a Passing Fad
1. Artificial and Unmotivating
When improperly implemented, gamification can give artificial and uninspiring vibes. For instance, if a banking app simply throws in game-like elements like points or badges, without these having a clear purpose, the user could declare them meaningless. There must be a rigid connection to a user’s financial goals or real-world incentives. Vague-looking customer referral programs that keep popping up once you get into the sign-up page of apps can also be quite irritating for new users.
2. Addictive
Too much of anything isn’t good, goes the saying, right? Virtual rewards and achievements can sometimes become addictive, if not managed cautiously. Take a trade platform as an example. Over-gamifying certain elements could encourage excessive trading, which could lead to financial losses for users. Gambling-like behavior could become counterproductive, and this zeroes in the importance of the responsible deployment of gamification in Fintech.
3. Exclusive to People Who Enjoy Playing Games or Have Time and Energy
One reason why gamification might just be a fad is the exclusivity aspect. Users who aren’t interested in gaming or are short on time/energy to engage with it. Imagine an investment app with a labyrinthine gaming interface - this would surely alienate older and not-so-tech-savvy audiences easily. Fintech companies need to include gamification elements that can resonate with a broader user base.
4. Expensive to Implement and Maintain
Goes without saying, gamification doesn’t come cheap. It necessitates continuous ideation, designing, testing, retesting, and updating for features, elements, and programs. The expense of the whole process could put a financial strain on smaller startups or even lead to cost-cutting moves that could seriously dent the user experience. In some instances, customer referral programs can also be quite expensive to deploy and keep going.
5. Regulatory Challenges
Arguments for Gamification Being Here to Stay
1. Powerful Tool for Engaging and Motivating Users
Leveraging game design elements to make financial activities more engaging, gamification can be a game-changer (pun unintended) for Fintechs. Chime is a fantastic example here. The app contains fun elements and a user-friendly interface that promotes user engagement. A robust customer loyalty program can also set the cogwheels of new user acquisition in motion.
2. Promotes Positive Behaviour
Through gamification, users can easily practice prudent financial habits. Take Acrons here - the app rounds up daily purchases to invest whatever spare change is left out. This sort of micro-investing method motivates users to save up and later invest, directly promoting long-term financial stability.
3. Personalized for Individual Needs
Again quoting Mint.com here, Fintechs use gamification to customize their services to individual users. They analyze spending patterns and dole out money-saving tips, targeted financial advice, and suggestions for better overall financial health.
4. Integration with Existing Products and Services
Gamification is definitely here to stay because of this nifty feature of integration with other products and services. And Fintech companies realize this! Take PayPal’s deployment of gamification in Venmo - features such as the social feed and emojis for transactions coolly blend user interaction with financial activity and appeal to its younger crowds.
5. Data-Driven Insights
Feeding off of invaluable user data, gamification by Fintechs allows the same users to make better financial decisions. Credit Karma has gamified the process of tracking your credit score, making it a cross-check point to improve your spending habits.
6. Preferred by Millenials and Gen Z
Those in their early to mid-thirties and younger love interactive experiences. They even love the dopamine that technology gives because of the extensive exposure to the internet and social media. Apps like Stash have cashed in on this. Stash offers fractional stock ownership with a fully gamified, intuitive interface that aligns with the age group’s preferences for financial education. Gamification in loyalty programs can go a long way in retaining users in the long term.
The Future of Gamification Fintech
Gamification has kind of become a permanent fixture in Fintech because the process effectively engages, encourages, and empowers users. While promoting positive spending behavior, it provides personalization and easy integration with a Fintech company’s products or services.
The points that go in favor of gamification being a passing fad can be mitigated. However, some challenges do need to be addressed for it to garner long-term success in Fintech.
Check out some recent trends in gamification for the money sector:
Artificial Intelligence Gamification: The boom of AI is simply too loud for it not to be heard in gamification. Now, there are AI-powered financial coaching apps that personalize every nook and cranny of spending for the users. Gamification in loyalty programs is another area that uses AI to detect social behavior.
Social Investing Apps: You can target investing in companies whose values align with your own, using criteria like ESG scores. This promotes competition and collaboration more with gamification.
Financial Education Games: Nope, I’m not talking about Monopoly here. Practical Money Skills’ “Cash Puzzler” is one for 3 to 6-year-olds. That’s how early you can go with gamification!
Competition in Fintech digitalization is increasing at a blitzy rate. To stand out among the crowd, banking apps, investment apps, and payment apps need to figure out bigger and better ways to increase user retention and hop onto the latest trends, as gamification is here to stay. Loyalty programs that actually make a difference are one of the easiest ways to gamify FinTech.
Whether it is to acquire customers, increase user retention, or improve engagement compared to your competitors, find a reliable partner who can guide you through integrating gamification elements seamlessly into your platform. Start your journey at theflyy.
