Gamification for Business Growth in Banking — II

by Anuj Kumar

In the first blog of this series, we introduced gamification, delved into the fundamentals of the subject and discussed some interesting examples of how gamification can drive growth in a business. We also touched upon implementation of gamification in banking.

In the second blog of the series, we introduce key pillars of implementing gamification. In addition, will go through an instance from banking industry that exhibits implementation of game dynamics.

You may find it surprising to know that concepts of gamification are not limited to mere game dynamics. These concepts are actually widespread in the world around us for example — the prevalence of the QWERTY keyboard. Why has no change or innovation occurred in the QWERTY pattern of alphabets present in most keyboards for the last 150 years?

Before we give you the answer to this question, let us walk through the key pillars of gamification fundamentals.

For gamification to work in a domain other than gaming industry, the foundational support of the following key pillars (Cronstedt, Jonathan) is required:

1. Context: Gamification applied in any discipline must relate to the context of the applied area.

2. Value: All participants must associate themselves with some level in the value chain of rewards and learnings.

3. Success: Gamification must provide equal and populous grounds for success. Because if participants find it difficult to achieve success or gauge that only few can be successful- then the user may get frustrated and exit.

While ordering your favourite Pizza, you may have not realised that Pizza companies also apply gamification principles while providing discounts. Try ordering Pizza in the middle of the week and you will find it cheaper than it is on weekends. These kinds of discount offers exhibit the implementation of the key pillars and principles of gamification to grow business.

Context → Use price sensitivity of users to increase the craving of pizza in mid of the week.

Value → Monetary rewards for users in terms of discount and business growth for pizza companies.

Success → All Customer get a good deal & Pizza Companies have increase sales volume in mid-week.

We may find it difficult to imagine how the complex framework of gamification can be applied in banking. Let us look at an example of how this has been done in lending-

In approximately 200 years of lending history, repayment of credit to Banks has undergone drastic change with the introduction of “Credit Bureaus”. Before this CBs came into picture, borrowers may have repaid their loans due to follow-up by lenders or out of fear of imposition of penalty and high interest on loans. Noticeably a win-win situation along with fear as motivation to repay was missing. Introduction of CBs changed the dynamics of lending money. ‘Credit repayment history report’ supplied by credit bureaus, having credit scores & customer details have become an integral part of lending money in today’s world.

How principles of game dynamics are relevant for the case of credit bureaus is a matter of exploration. A brief interpretation may be as following:

1) Goals: Every customer wants to achieve a goal of high credit score, because the banking industry values high credit scores for credit processing

2) Status: Credit score and knowledge of good score levels is widely available through Credit bureaus & multiple FinTechs providing information free of cost

3) Community: Anyone who has taken a loan or aspires to take a loan becomes a part of the community that has a credit score assigned to each member

4) Education: Tips and suggestion are widely available on the internet for improving your credit score. Some financial institutions also share newsletters around this topic.

5) Success: Customers who make regular repayments can improve their credit score

Thus, credit bureaus also stand on the firm foundational pillars of gamification. Credit bureaus fit in context along with facilitating a win-win situation for customers and lenders. With constructive value delivery and widespread success ratio of achieving a high credit score with regular repayment of loans.

Implementing gamification requires creation of a continuously motivated environment with a win-win situation in mind for most of the stakeholders.

Now, let us solve the puzzle of how the QWERTY style of keyboard has survived the mind-sets of millennials and many generations. To do this, let us take a step back and examine the success story of IKEA, a furniture store. An important aspect in IKEA’s success story is the Do it Yourself concept, which means that you will end up assembling (by yourself) some part or the other of almost every piece of furniture you buy from IKEA.

As a user of any product, service or platform, we as humans are probably hardcoded for giving irrational value to our own efforts. I consider this as the IKEA effect. It is prevalent in the gaming industry as well. Some games provide the freedom to design your own personalised objects (your own Avatar, car etc.). When users have the option to make empathetic investments in a game by creating these customisations, it becomes challenging, for game users to switch to another avatar or altogether different game and perform investments again. These investments will keep driving you back to same avatar or the IKEA furniture you can build on your own.

The survival of QWERTY alphabet pattern through the ages is a prime example of humans becoming attached to objects that involve investment of their time and effort. Most of the members of the computer user generation grow up learning and mastering a complicated keyboard pattern, namely QWERTY. It becomes nearly impossible for competitors to bring new kind of keyboard, as for users, the act of typing on a QWERTY keyboard has become automated impulse. Instagram employs the same principles to hold on to users. A lot of users invest their time and memories in posting images they love to share in public and with friends. It creates a mental block to switch on new image sharing platform due to empathetic investment done on the platform.

Our digital audience the millennials are quite distract-able in the context of holding onto doing business with a single financial institution. We may ask what bridges that gap. Vitamins covered in first blog may be one answer, Institutions must explore other options also as vitamins is investment intensive methodology.

How can financial institutions retain their customers through gamification?

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

To be continued…