Banks and Financial Institutions (FIs) have been trying hard to gain customers and increase market share in the retail customer segment. Traditionally, a bank’s distribution channel via extensive branch network used to guarantee that the prospects could always reach the bank and do business with them. Now, because of digital disruption, prospects are seeking banks in newer channels, especially the mobile. Banks need to become ubiquitous in all possible channels.
As per a survey, “Angry Birds” has been downloaded more than 300 million times and is played more than 30 million people daily. The website TheFunTheory.com demonstrates several scenarios wherein human behavior has been positively impacted using gamification. The above examples draw more curiosity when it is known that these games do not provide any tangible rewards.
This implies that Fun works and it can be very instrumental in bringing about a positive transformation.
Why the need to introduce gamification in Banking?
For most of us, financial health is of paramount importance, yet we find banking dull and uninteresting. Most of us use our bank’s websites and mobile apps simply for our transactional needs and unplug from them at the earliest possible time. Since banks and financial services companies manage our financial information, they are in an enviable position to create the maximum impact on their customers by gamification.
• Driving loyalty in new customer segment: As per a survey conducted by Cisco Internet Business Solutions Group, over the next few years, the Gen X & Gen Y Groups will constitute two-third of the US population and shall be the strategic customer segment for the banks and FIs. There is a tectonic shift in their banking needs and hence the “one-size-fits-all” approach by their financial institutions may make the latter irrelevant.
This segment of customers is quite tech savvy and need to have their banking-related information on their fingertips, avoiding a need to go to their banks.
The new segment stresses lot of emphasis on socialization. They often ignore the marketing messages targeted at individuals in favor of social consensus. Maintaining loyalty in this customer segment would become an uphill task. Gamification facilitates socialization and would enable better engagement of the customers. Gamification can serve as a good loyalty management tool to build foundational relationships.
• Differentiation: Mobile banking has been existent for few years now and shall mature soon. Most banks ranging from the Community Banks / Credit unions to the bigger Commercial Banks offer basic mobile banking services, making it a utility service to the customers. The services offered include basic needs like Account Inquiry, Amount Transfer, Cheque Payments, Locating Bank’s Point of Presence (POP), Customer Service, etc. Though there is some differentiation in these services being offered, this is likely to get blurred over a period of time. Gamification embedded in mobile applications could serve as a competitive edge in enhancing the engagement with customers and might be instrumental in causing customer defection from competitors.
• Thin spread in retail services: With low interest rates and burgeoning costs, the spread in Retail Banking Services has not provided lot of reason to cheer. For many banks, the margins in retail banking have been in single digits. As per a report by Deloitte, branches still remain the largest distribution channel and their ubiquitous presence still remains a differentiating factor. However, consumers’ reliance on branches has significantly reduced. This has caused a shift in the banks and FI’s as they try to reduce their branches to squeeze their costs. Banks can use this engagement model to understand the customers better and provide requisite assistance instead of adhering to brick and mortar POP. This also boosts the banks’ bottom line and provides access to a larger customer base thus providing a good opportunity to cross sell their bouquet of products and services.
• Need for Personal Financial Management (PFM) services: Owing to the demographic shift and a need for budget consciousness among the Millenials, the need for PFM becomes quite pressing. PFM Services can be more productively served by gamification. Good PFM apps can help customers manage their finances much better – analyze their expenses, track their portfolio across various financial institutions, manage their personal budgets, etc. A good gamification app could serve dual purpose – engage the customer and help him/her manage finances. More than a dozen non-banking PFM sites have mushroomed in the recent past. Since banks have better access to customer’s financial data, this service might be best served by them. PNC Bank’s Virtual Wallet is one such valuable tool for the customers and this will certainly cause a differentiating factor.
• Value add services: Gamification can also be leveraged to propagate financial literacy among customers: Some businesses have taken up steps like Bank of America’s initiative to propagate financial literacy to their retail customers. Their venture with Khan Academy is one such example.
As per the sixth annual national survey assessing household saving, it is found that the average American citizen is not saving enough. Sites like “Feed the Pig” have hence emerged to serve this society need. Since Banks and FIs have direct access to the customer’s finances, they can certainly help the customers better.
While banks have been struggling for eyeballs and wallet share, gamification can certainly become an effective tool to help meet this expectation. With the help of analytics, banks can easily analyze and categorize customers into various business segments for very focused marketing approaches. The financial institutions can leverage the customer data to offer real-time data feeds into gamified applications to make personal finance interesting and fun and thus engage their customers. This facilitates the banks and FIs to develop better long term relationships with their customers, improvise sales and capital positions, etc. Some banks’ gamification initiatives have been witnessing gains. Since this is still in a nascent stage, this might be the ideal time when other banks and FIs could leverage Gamification to foster goodwill, enhance customer engagement and augment their client base.