Are You Playing Games With Your Customers? Part I of a Series on Gamification In Banking.

gamificationIn many a past opportunity, banks have adopted new technology and have stayed in a virtual boundary of what the opportunity represents. Be it presence on social media or bringing text based banking to mobile phones, banks have been great at adopting the technology and introducing their consumers to it. The unfortunate part is that often non-traditional players have come in and perfected the model, thereby making banks not so very cool in that space anymore.

Gamification is the next new “cool” model emerging for consumer engagement.
The question out there is will banks uptake it, perfect the model and lead the charge or will it be yet another of those ideas which will get perfected outside the bank.


Take a moment and think about it - when was the last time your customers were really interested in, excited about or actually enjoyed an interaction with your bank?  Most banks have struggled to understand consumer banking behavior in relation to the next-generation technologies and to drive higher levels of customer engagement.

SMS banking and mobile banking applications become a case-in-point here. While the rising adoption of phones in developing markets represented a potential opportunity to extend banking services to the 'unbanked', SMS banking offers limited extensibility to offer customized solutions to users. Once the targeted user segment graduates to next-generation mobile banking, user engagement withers away. Similarly, most of the mobile banking services today leverage the 3rd-party application eco-system to let users check their balances and transfer funds. However, when you compare these features against the vast array of functionalities in a smartphone today, one can't help but wonder if the banks are still under-utilizing the mobile potential. P2P payments, mobile wallet, NFC, location-based services, digital gift cards, mortgage and auto insurance quotes are some of the many emerging usage cases which the 'digital customer' of today faces day in and day out. Most of the traditional banks have not been able to tie a strong story between these opportunities and their customers.        

Such limitation on the part of traditional banks in turn has opened the doors of opportunity for 'new entrants' as well as newer modes of user engagement and retention. The new entrants have proved that banking isn't immune to the pace of technology and that customers are willing to adopt newer ways of banking. 

Gamification - a chance for banks to be an early-adopter to tap into customer engagement and retention

As the millennial generation continues to gain traction with modern day technologies, loyalty marketers at banks are struggling to attune their offerings to the changing customer demographics. This is where the gamification comes into picture. Gamification is the fundamental application of game science logic in the product / service engagement strategy to ensure higher levels of sustained user engagement. Points, badges, rewards and leaderboards are applied to drive an incentivized product offering to the user, thereby essentially changing the way in which the user 'engages' with the service. This is not a new concept - Foursquare as been awarding badges and rankings to its users for location check-ins since 2009. The principles of gamification have been adopted by large enterprises in their business strategy. Gartner considers gamification as a critical trend to watch out from CIOs perspective.


How does Gamification help in Customer Engagement ?
The idea of gamification rests on the understanding that individuals tend to see day-to-day workflows as tasks, with an inherent desire to compete, be challenged, operate within the given constraints (rules), win, and be rewarded for their achievements. Such a 'game scenario' has the ability to engross the user at emotional levels, thereby causing deep engagement with the task associated. Gamification in banking parlance implies applying game design thinking to non-game applications such as rewarding customers for watching a bank's online service features tutorial, answering a series of questions and thereby rewarding with loyalty points.

Overall, gamification allows banks to cash in on a nascent trend by getting in the game early and paving the way for future interactions with customers. In the next edition, I will talk about how banks are looking at ways to adopt gamification in their core business model.

I would love to hear about how your institution is looking at applying gamification within your traditional banking processes to engage with customers.

Tushar Chitra is the Senior Director for Product Marketing at Oracle Financial Services.  He can be reached at tushar.chitra AT oracle.com



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Comments:

"Gamification is the next new “cool” model emerging for consumer engagement. "

Really? Seems like a fad whose time has already past, after a bit of buzz a couple of years ago I haven't heard anyone talking about it in UX circles for about the past six months, nor have I seen any evidence that it's moved from hype to production.

Posted by guest on March 20, 2013 at 01:21 PM EDT #

As a concept, Gamification sounds interesting and may help banks to increase customer stickiness. Banks need to look at Gamification as a tangible asset and should be in a position to assess the impact on business.

Why should banks embrace such nascent ideas?

Today’s buzzword is "DISRUPTION" and it is these disruptive practices that are changing the business scenario across different sectors that includes banking industry as well.It enables non-traditional players to shake up incumbents.

Who would have imagined competition to camera manufacturers from mobile handset manufacturing companies? Amazon sells more digital books and has driven some of the traditional businesses (Border group, Barnes and Noble) into background.

On a similar note, banks should not be surprised if they come across a search engine company or some other social networking organization emerge as a leading payments engine relegating banks to a back-end utility company as a provider of infrastructure for money management.

How can banks face the emerging challenges posed by technology and companies driven by technology?
Ans: Change the way they think, stop thinking they are banks and meet these challenges head on!

Eagerly awaiting the second part to read how banks are trying to make Gamification a part of their core business.

Posted by guest on March 20, 2013 at 01:38 PM EDT #

Yes absolutely, the complexity of today’s banking business is such that it’s not always easy to put a dollar amount to each investment or service offering. Lets step back into few of the other ideas from the past, be it internet banking, text alerts, or for that matter even some of the promotional campaigns. Arguably, there are some measures which do make it to a mark where possible, for example if you run a campaign on the web, clicks, eyeballs etc can be measured. However, the critical thing to consider is the opportunity loss if you focus on quantification vs the risk taking appetite.

Some of the ideas in the gamification space are going to be easy to adopt, and some will need systemic changes which may take time.

In a recent observation by a key exec from the IT industry, he observed that the total IT spend by some of the largest banks in the world exceeds the total R&D spend of the top 3 enterprise software companies put together, so IT and banking are definitely tightly coupled. The challenge to explore is how do you simplify your IT to create space for such disruptive innovation and lead the market. Some banks will pick up ideas make it centric to their business and will lead the curve while others will be pushed to make the choice in order to stay competitive or will look for the next possible disruption which they can lead. There is no two ways on finding the next big opportunity, and there are a few knocking right now!

Posted by Tushar Chitra on March 25, 2013 at 01:59 AM EDT #

What's interesting about competition to the banks is where it's coming from - market adjacencies.

E-commerce and mobility (and thus the changing behaviour as to WHERE and HOW we spend) have given birth to 'new entrants' such as Square, PayPal, etc.who are moving customers away from traditional banking services, albeit in smaller-but-increasing volumes. Every other day we hear about the alternative P2P digital currency Bitcoin finding newer buyers (especially during the recent Cyprus banking crisis).

What we've seen is these new players tend to respond to emerging trends such as social currencies, P2P, gift cards, etc. much quickly than traditional banks. What gamification offers the banks is a chance to get into the groove much earlier this time around and see how it works out. Not many banks have been able to nail down the most correct usage scenario for gamification, but that is something which needs to be tried and tested till they find their secret sauce.

Posted by Abhishek Shah on March 26, 2013 at 02:57 AM EDT #

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