Gamification and Simulation tools: Enhancing the Wealth Management Customer Experience

Managing your savings is not what it used to be a few decades ago. Despite the rising interest, it was far too intimidating to invest without having an in depth understanding of how financial markets operate. However, this took a turn when more financial services companies embraced the incorporation of gamification. Elements such as points, badges, and leaderboards were put into non-game contexts. Gamification has since been gaining traction after wealth managers saw an increase in engagement and motivation among users.

In fact, according to MarketsandMarkets, the global gamification market is set to grow from $9.1 billion in 2020 to $30.7 billion by 2025. The proliferation in gamified apps is also due to investing apps like eToro, Webull and Robinhood which started using slicker user design and intuitive flows. Moreover, the US Federal Reserve Bank of Boston introduced digital games to improve financial literacy. For instance, SavingsQuest used an animated pig that danced every time the user engaged in savings.

Does gamification exacerbate risk-taking by individual traders?

While adding such features enables wealth managers and execution platforms to step up on engagement, it’s not all fun and games for users. Gamified apps can distract consumers from the inherent risk involved in investing with trading behaviour becoming akin to gambling.

Here are some instances when gamification went wrong:

• In 2021, the “meme-stock” trading surge in Gamestop equities prompted the U.S. Securities and Exchange Commission (SEC) to raise concerns about “behavioural technology” and gamification of trading apps. As a result, it stepped up its probe into gamification used by online brokerages that encourage trading.
• Elsewhere, Robinhood faced major regulatory questions about the way it promoted overly risky trading with features such as behavioural nudges and push notifications creating a gambling-like atmosphere. Apart from penalties, it had to eliminate its confetti animation.
• In the UK, the Financial Conduct Authority (FCA) too cracked down on “game-like elements” in trading apps, warning that they risk leading consumers to take actions against their own interests. It said share trading apps were giving customers “in-app points, badges and celebratory messages for making trades”, and people using these features were more likely to “invest in products beyond their risk appetites.”

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 digitalized business models, leading customers to make poor financial decisions will bring regulators to your doors.

Want to play a game? Play wisely

The consequences of an investment made when one is motivated by a badge could be dire. When designing an app, it’s imperative for wealth managers and brokers to communicate to your customers very clearly that managing their savings is not the same as playing Candy Crush, as investments entail transactions with real money.

To get the most out of the engaging, gamified elements in self-service journeys, wealth managers should equip their customers with enhanced decision-making tools that help them take better informed financial decisions.

To begin with, the financial analytics driving the calculations behind the updated interfaces is critical for providing quality wealth management and brokerage services for your customers. Therefore, it is essential to ensure that the solution supporting your decision-making is granular enough to suit your investment product universe, flexible and auditable. Kidbrooke® achieves this by packaging its analytical capabilities into versatile APIs, devoting a lot of attention to maintaining and developing the underlying financial models, assumptions, tax rules, and leveraging our utility-based methodology, which maximizes the value-added for the given customer by a particular financial alternative.

OutRank® enables wealth managers and execution platforms to illustrate potential consequences of their customers' decisions on their platforms. 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.

Why use OutRank® for investment management?

A tool like Kidbrooke’s OutRank®  can take the client on a journey of self-discovery: help them understand their appetites for risk and reward, the feasibility of their financial goals and the range of scenarios that could get them there.

At Kidbrooke®, the technology is transparent with all assumptions articulated, data enumerated and processes made clear. There is no black box; clients understand which data goes into the framework and which data comes out of it. They can interrogate the simulation and reformulate it with different sets of assumptions.

With OutRank®, wealth managers can evaluate and measure the progress their customers are making in achieving their financial goals. By using our simulation engine, advisors can convey simple messages to a customer and create meaningful push marketing campaigns.

Using financial simulations can make financial planning truly enjoyable. Providing engaging and interactive financial journeys and a responsible service that aids the customer to make educated financial decisions will gain more customer loyalty compared to encouraging gambling or irresponsible behaviour.

As the economy continues to slump, calls for investing apps to become more responsible are likely to amplify. In the coming months, many consumers may turn to execution platforms and wealth managers as a way of offsetting the rising cost of living. If advisors can be equipped with the right tools and their platforms provide responsible and engaging technology, they can use this opportunity to expand their customer base and help more categories of consumers receive better informed financial decisions.