• Jazgul Ismailova

What is gamification, and how fintechs are embracing it?

Lunar Bank recently announced the formation of a partnership with the Danish Esports Organization, Astralis Group, to help gamify banking experiences to better reach the young gaming audience. Standard Chartered wants fintechs to help it with gamification solutions to drive user engagement. They are looking to roll out a new goal-based saving product for its retail banking customers in Kenya and are asking fintechs for help. With 2.7 billion gamers spending $159.3 billion on games in 2020, online games are setting standards for user experience, not only with gaming, but also in the fintech industry.

What is gamification? The term gamification was coined in 2002 by Nick Pelling to mean the use of gaming elements in a non-gaming context. Gartner expanded the definition of gamification as the use of game mechanics and experience design to digitally engage and motivate people to achieve their goals. When successfully designed, gamification apps expand user engagement and drive customer acquisition and retention. Skepticism around the impact of gamification on customer engagement was also found. Some experts limit gamification to points, badges, and leader boards but miss the underlying human drivers. Understanding motivation is the first step; motivation should be complemented by choosing the right execution for the target group and developing the gamification solution. Over time, as users become more knowledgeable, their motivation changes and lead to demands for a new set of gamification features.

Yu-kai Chou, a prominent gamification designer, introduced the Octalysis framework. This method maps gamification features with core human drivers. Universal human needs, such as accomplishment, meaning, social influence, and empowerment, form the basis of the model. The model is complemented by behavioral features: (1) scarcity, (2) avoidance, (3) unpredictability, and (4) ownership. Starting with human drivers at the core of the model and completing it with customer segmentation and category involvement levels (light versus heavy-users) yields the most holistic framework.

Why is gamification important? Recent research confirms that gamification is effective in building customer engagement; however, implementing customer engagement in the right context is crucial.

Chou says gamification can have the most significant impact in industries that are extremely important but relatively mundane. These types of industries include fields, such as healthcare, education, finance, wellness, and corporate governance.

In low-engagement categories, such as finance, gamification is a way to raise awareness, increase engagement, and help people reach their goals. Money saving apps, such as Dreams and Qapital, use behavioral science and gamification features, such as automated weekly transfer to a savings account, unexpected transfer of smaller amounts, goal-based savings, and savings round-ups.

How does Sparla apply gamification? At Sparla, we are committed to helping young adults build better money habits. We are designing our product based on the latest research and best practices within gamification and nudging. By helping our users to spend less, we will help them to create a space in their wallets to start saving more or paying off their debts. Below are key examples of how we apply gamification and nudging in our app design. ●When receiving their salary at the beginning of the month, many people feel that they have a large amount of money, which makes it easier to spend their salary during the first week. They are then left with noodles for the last two weeks. To avoid this effect, we are applying a scarcity mechanism by automatically matching monthly income to monthly savings and expenses. This process will show the amount that is safe to spend without affecting the monthly budget. ●Monthly savings are first in line before monthly costs. In this way, we want to "nudge" people to think of saving first and spending what is left. Budgeting monthly savings should provide incentives and make is simpler for people to save more and spend what is left. ●Financial fitness score is an intrinsic motivator aimed at helping people master their financial skills. Reaching a higher score, our users will be sure that they are making progress with respect to improving their skills and habits. ●"Sparlies" are points that are awarded for good money deeds. If they keep their daily budget, they will earn "sparlies" that can be exchanged for deals from sustainable budget brands, such as secondhand shops.

At Sparla, we were inspired by the Octalisys framework in which gamification with human drivers at the core was implemented. Stay tuned for our gamification journey and follow us at LinkedIn.

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