Gamification for Business Growth in Banking - I

by Anuj Kumar

In this series of articles, we will be discussing gamification and how it can be implemented in the Banking industry. We will delve into the fundamentals of gamification and chart our way to talking about a few innovative implementations of the concept in the world around us.

Have you ever wondered why the FinTech space has seen an upsurge in the recent past? Conventional wisdom would attribute it to the right mix of Government policies, technical skills of the IT force, capital investments, and entrepreneurial innovative mindsets. However, if we dig deeper and employ Sakichi Toyoda’s concept of 5 Whys, we may arrive at the root cause being gamification principles. The consumer’s emotions are being repurposed to make this happen. “Who are these consumers?”, you might ask. It would be the generation that is most familiar with the digital- the millennials. This audience has the power to influence the complete ecosystem to deliver on-demand.

One is forced to ask- what are these emotions?

Have you ever been awestruck by the number of Apple iPhones sold on the day of its launch worldwide? 9 MN iPhones within three days of launch. How did humanity reach a stage where this has become a norm? There could be multiple reasons. The primary ones are deep-rooted in our brains; these would be a good mix of the following-

I. Fear of missing out (FOMO)

II. Want of Rewards:

a. In form of social acknowledgment

b. Self-perceived rewards and appreciation

III. One’s sense of craving

IV. Ability to take action i.e. go and queue up the Apple stores.

The latest addition to the unicorn club of Indian companies in April ’21 has been a FinTech named CRED. CRED became a unicorn ($1bn+ valuation) in quite a short time period of 3 years. You may wonder about how long it took for the Top 3 banks in India to gain such a valuation. It took more than 3 years for sure. What did CRED do differently from the Top 3 banks with established roots and loyal customers? CRED has followed the principle of Vitamins and painkillers (EYAL, 2019, p. 31).

In India making credit card payments and tracking them in one place was a pain for lots of customers, hence CRED provided painkillers to this problem. Painkillers are instant relievers to a problem, hence a product that employed a heuristic approach was created. Since any feature that appears as a mental exercise will completely kill the objective of the app being a painkiller, CRED provides an interface to pay your credit card bill in just 4 clicks. In addition, you get to win reward points called CRED coins for payment of bills through the CRED app, these points enable you to buy vouchers & cashback. These CRED coins are vitamins, there is no conscious need but if you get them, you feel good. While in real life, vitamins may not lead to directly visible or tangible benefits as painkillers do, CRED has been able to use the CRED points to create a hook for the end-users. Meanwhile, end users are enjoying CRED coins; there persists another tendency of end-users i.e. to seek variable rewards. If vitamins are not contextually fit, users will start looking for better vitamins or start losing interest in existing ones. These investment-hungry vitamins (cashback, vouchers) could cost you fortunes, as these are net cash negative transactions.

The fundamentals behind the gargantuan Apple iPhone sale numbers and the success of platforms like CRED are the same. Both these instances exemplify the Gamification playing out in our society. Innovation of this kind has potential to explode any sector including banking.

Gamification is not about gaming; it is about repurposing the whole concept of gaming industry principles in different contexts and exploiting the human motivations inherent to the gaming industry.

Understanding gamification requires a deep understanding of game dynamics that lie at the heart of the gaming industry (Cronstedt, 2017):

1. Goals: Participants work towards a particular objective
2. Status: Users can “level up” through various modules in the gamification strategy to gain status amongst their peers
3. Community: Teams work together to achieve specific goals
4. Education: Participants are given tips and tricks to help them navigate the game
5. Rewards: Rewards fuel motivation and help participants feel like they are accomplishing something

Let us visualize a situation in which one of the most popular banks in India, let’ say a tech-savvy bank offers a two-click loan to the first 10 customers at 5% p.a. then to the next 10 @6% p.a. and so on, in all the districts. This product is only sold on a first come first served basis to consumers having a minimum credit score requirement of 650. This product is available only for three days at the Diwali festival. One can only attempt to fathom the rush of customers. Multiple factors like FOMO, interest rates in the form of a reward system, and the feeling of need to spend to celebrate the festival, would contribute to this rush. These factors are further amplified by the heuristic-driven interface of a two-click loan process and the ability to click without thinking too much. The Big billion sales of Flipkart, an e-commerce store illustrate the same concept. The success of such e-commerce events may encourage banks to try such schemes. In fact, banks have the advantage of loans being high Customer Life Time Value (EYAL, 2019) products.

Lending is an industry that is driven through growth in consumerism or the mindset of consumers.In the ’90s, the average age of first home buyers was between 45 and 55, but in the 2000s the range came down by a decade to 35 to 45 in India due to the availability of easy home loans (Craving to own one’s home & ease of taking actions). This average age went up in 2010 due to change in mindsets and easy availability of other types of finances like consumer durable finance etc. (craving for consumer durable products & ease of purchase). It is no surprise that millennials give a lot of weight to the instant gratification of buying a new car, cell phone, etc. By purchasing such items, millennials earn instant rewards like social recognition even while they take a step back on the long-term investment front. Concepts of Game dynamics are in play behind all these changes. By being proactive about designing their products, the banking industry may just meet the ever-shifting expectations of the younger generation much like in the Facebook game FarmVille based on variable rewards.

How can game dynamics be implemented in banking?

You will find answers to this question in the next article of the gamification series, stay tuned.

To be continued…