The rise of gamification – and why the financial industry needs it too

Amol Tyagi, 2021

Humans are naturally playful but as we progress from childhood into adults, most of us neglect this aspect of our lives. However, recently this has begun to change, with gamification growing in popularity across all industries. The most obvious reason for this is the widespread popularity of gaming from a very young age, combined with an increasingly interconnected world of smart devices. People in general have become much more interested in technology and adept at using it, with some even crossing the line into tech addiction.

The trick is how to use gamification in a more positive way, specifically when we apply it to the financial services industry. Historically, these businesses have designed unduly complex products and services, with little transparency on their terms and conditions. This has resulted in an uncomfortable asymmetry of information and expertise, where the so-called financial experts knew much more than their clients about the financial products they were offering.

By applying the concept of gamification to the financial advice sector, we can shift this dynamic and provide more benefits to professional advisors and their clients.

Engaging different kinds of learners

A large part of this rise in popularity of gamification may be its ability to engage different kinds of learners. A whitepaper by Australian financial advisory firm Advice Intelligence references a number of different approaches to learning styles, including the visual, auditory & kinesthetic approach, as well as the big picture vs. detail approach. For example, some people first need to understand the big picture and fill in the details afterwards, while others need to learn the details first, how they fit together, and then see the big picture.

This is echoed in Howard Gardner’s Multiple Intelligences Theory, which says that people are capable of learning in a range of ways: via words and language (linguistic), via numbers (logical-mathematical), through sound (auditory) or through images, diagrams or videos (visual). Interestingly, when researching people’s learning styles, Advice Intelligence found that:

• 65% of people surveyed were visual learners, learning through visual aids such as infographics, pictures, maps and diagrams

• 30% of people were auditory learners, learning through listening, speaking, language and discussion

• 5% of people were kinesthetic learners, who need to act in a 'hands-on' way.

Understanding a client’s learning style has powerful implications for all communication, whether it is digital, written or face-to-face. In the context of financial services, financial advice needs to be given in a way that connects to people’s preferred learning styles in order for them to understand concepts and solutions.

What this means is that the traditional way of creating a financial plan and delivering advice is disconnected from the way today’s consumer likes to interact. Gamification, on the other hand, provides an alternative approach that is more appealing to the larger proportion of people who are visual learners.

How does gamification support the goals-based advisory approach?

Relative to a traditional ‘old-world’ financial plan using legacy technology, goals-based financial planning is more achievable because of its simplicity. In other words, a plan that is visually simple and broken down into specific goals has a higher chance of being understood and therefore becoming the client’s reality.

International research also shows that retail affluent investors who have a clear goal will be far less likely to make an irrational – and ultimately costly – decision to sell out of their investments at the wrong time. By using gamification, getting to the goals-based plan can also be more fun, more interactive and more inclusive for clients.

One example of this is slate which is a gamified advice web application and process for financial advisors that was developed in the Netherlands. On slate, the client and advisor play the digital equivalent of a board game, with a deck of cards where each card represents a different potential life priority. These include educating children, buying a house, managing loans, caring for your parents, starting up a new business and safeguarding your life, income and assets. In this way, the gamification element helps to provide a more intuitive way of tackling goals-based investing because the process is broken up into discrete financial goals and then looked at holistically.

Simple and interactive

There are other major advantages that the concept of gamification offers the financial advice sector:

1. It simplifies things. By making any process into a version of a game, it naturally becomes a simple step-by-step process that is more easily understood. As a result of the gamified process, the user can be more deeply immersed in the investment process, rather than being simply a receiver of the complexity.

2. It’s more engaging. Using the slate example, advisors report that as a digital engagement tool, it lends itself extremely well to the current environment where face-to-face advisory sessions have been reduced. Advisors everywhere are looking for interesting ways to keep engaged with their clients while obeying social distancing protocols. Using slate, the client and advisor can enjoy a meaningful ‘advice experience’ from the comfort of their own homes, through their digital devices.

What are the key success factors to gamification?

When it comes to financial advice, gamification needs to be central to the process rather than piecemeal, in order for it to be effective and appealing. In other words, rather than lumping a game into a traditional financial planning process, the whole end-to-end experience must flow, and be enjoyable and continually insightful along the way. Above all, it must be simple to use, simple to understand and simple to perform various scenarios on.

Gamified financial advice tools like slate address a key problem in the advisory space, which is a lack of certainty when it comes to financial outcomes. With a gamification tool, the technology and the process followed by the advisor ensure that a coaching style of advice is adhered to on an ongoing basis with each client. The advisor now listens not with intent to reply, but rather to understand what really matters to the client. Over time, as the advisor shows increased understanding and appreciation for the client’s unique goals, the client’s behaviour towards investing will also change for the better.

As a financial advisor, have you ever used gamification to engage your clients? How do you think it helps? Leave your thoughts in the comments below.