What wealth managers should know before using gamification


Gamification can bring a level of excitement and greater engagement to financial services, but it can delude users about the risks of investing.

Kidbrooke has released a new report that explores how gamification and simulation tools can transform the wealth management customer experience.

Gamification has slowly increased its footprint within financial services over the past few years. These types of services include gamified systems such as points, badges and leaderboards.

A report from MarketsandMarkets claims that the global gamification market will grow from $9.1bn in 2020 to $30.7bn by 2025. Even the US Federal Reserve Bank of Boston has looked to gamification, implementing digital games to improve financial literacy.

An example of gamified financial services is SavingsQuest, which has an animated pig that dances every time a user engages in savings.

However, while these types of services can help to improve the engagement of customers there are risks involved. Kidbrooke stated these types of apps can distract consumers from the inherent risk involved in investing making trading behaviour akin to gambling.

It pointed to the Gamestop ‘meme-stock’ incident. As a reaction to this, the US Securities and Exchange Commission raised concerns about behavioural technology and gamification of trading apps. This led it to increasing its probe of gamification used by online brokerages that encourage trading.

Robinhood also faced significant regulatory questions about how it promoted risky trading, such as its behavioural nudges and push notifications, which was believed to create a gambling-like atmosphere. It was even forced to remove a confetti animation.

Finally, the UK’s Financial Authority scrutinised game-like elements in trading apps, warning they lead consumers to act against their own interests. It stated the in-app points, badges and celebratory messages for making trades, encouraged people to invest in products beyond their risk appetites.

Kidbrooke said, “It’s easy to see how investors can be misled by rosy projections of profit by technologies that, in reality, understate the risk of a particular investment or the odds of eye-popping returns. It is crucial for wealth managers, execution platforms, and life insurers to approach the integration of gamification elements with caution.

“Admittedly, there is a tough balance to seek. Where engaging elements can build customer loyalty and improve profitability of digitised business models, leading customers to make poor financial decisions will bring regulators to your doors.”

Best practices of gamification in wealth management

Kidbrooke offered some guidance on how wealth managers should explore gamified services. The most important is communicating with customers that just because they can earn badges, managing savings is not the same as playing Candy Crush, there are real effects of investing.

It added that the way to get the most out of engaging, gamified elements in self-service journeys is by equipping customers with enhanced decision-making tools that support informed financial decisions.

To begin with, the financial analytics behind the calculations of the updated interfaces are critical for the quality of wealth management and brokerage services offered. This makes it essential to ensure the solution supporting decision-making is granular enough for the investment product environment.

Kidbrooke believes its service does just that. It achieves this by combining its analytical capabilities with agile APIs.

The OutRank tool allows wealth managers and execution platforms to illustrate potential consequences of their customers’ decisions on their platform. It said, “By providing customers with a deeper understanding of your financial products and services, and an interactive and engaging experience, simulation tools like OutRank can help to improve the overall customer experience and drive business results, while ensuring that the potential risks and challenges associated with gamification are carefully considered.”

Read the full report here.

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