The mahogany-walled meetings rooms of private banks may not seem at first like a natural environment for video games. However, the worlds of private banking and gaming are becoming increasingly intertwined as wealth managers target rich millennials and their new-found fortunes. Last month, Coutts made headlines with the announcement that it is seeking to attract a new client segment of professional e-gamers for the first time in its 325-year history. In fact, Goldman Sachs estimates that the e-sports industry will be worth more than $1bn by the end of this decade.
As well as trying to manage the fortunes of millennial gamers, wealth managers have progressively been co-opting gaming principles, or gamification, into their offerings to create better client experiences.
Gamification refers to the concept of incorporating elements of games into non-gaming applications to encourage customer participation. Although many people would not identify themselves as ‘gamers’, we regularly encounter gamification techniques such as levelling up on airline loyalty schemes or going that extra mile to beat your Fitibit friend’s step count.
While the wealth management industry has lagged behind the digital curve, there are several applications for gamification to help educate millennial and first-time clients. Most firms have embedded the concept of goal-based investing although younger clients commonly underestimate how they need to save for retirement. Furthermore, recent studies have shown that many millennials believe they have insufficient knowledge of investments and possess a more risk-averse attitude than older age groups. Relatability is also an issue where the average age of a financial advisor is around 55 and there continues to be more advisors are over the age of 70 than under 30.
7IM’s app, My Future, was developed with the help of Nintendo gaming experts to engage younger investors and help them understand the benefits of financial planning. A gaming-style tool shows users what income they can expect in retirement and when their money might expect to run out under different scenarios. It can present a stark picture of a poor retirement for clients although this then serves as a prompt for advisors to discuss how to solve some potentially difficult problems.
Figure 1: My Future app
One of the benefits of gaming comes in the power to elicit emotional responses in clients as they can interact with and visualise the consequences of making different decisions. Private banks have previously used variations of board games where clients could place individual goals that they had and arrange them in order of priority with their advisor. Such an approach allows for the client to open up about their motivations and values in a way that a set of scripted questions may not facilitate.
Fintech companies are also readily incorporating gaming principles into their propositions to differentiate themselves in terms of client experience. Copper Street uses the popular concept of ‘fantasy football’ to gamify investments, allowing users to create teams of stocks and complete in interactive challenges. The app serves as a fun educational tool for would-be investors to learn about trading in a sandbox environment before they transition to trading real stocks in the same gamified structure. MeetInvest has also modelled its online platform on ‘fantasy football’ except instead of selecting a team of footballers, users can select their favourite star investors – less Cristiano Ronaldo, more Warren Buffett!
Another game changer (pun intended) could be the EU’s Second Payment Services Directive (PSD2) which is set to increase competition in the banking and wealth sectors. The directive will open up banks’ payments infrastructure and customer data which can then be shared across other businesses in a potential shift to the current balance of power. In the UK, a set of computer programming rules (APIs) will allow these new services and banks to all communicate with one another.
As we have already seen with Airbnb and Uber, it is who owns the data and the customer experience that stands to benefit most from this kind of digital disruption. Open banking may threaten the current hegemony of traditional wealth managers although they continue to own the experience through the strength of their personal relationships with clients. Gamification can help to innovate the industry and stay relevant amid the increasing numbers of fintech operators entering the market. Using these principles to keep clients engaged, stimulate business and provide insight should will fast become the name of the game.
Thought for the week:
“Tell me and I forget, teach me and I may remember, involve me and I learn.” – Benjamin Franklin
News from the world of wealth:
Barclays plans to send private bankers back to Asia – Financial Times
Advisors, broker-dealers too distracted to invest in the future – WealthManagement.com
A third of wealth managers expect market correction – International Adviser
Brewin Dolphin to expand its wealth management advice services – Financial Times
Author: Ben McNeil, Manager
Background: Before entering the wealth sector, Ben previously worked as a market analyst at a financial news firm providing insight across a range of asset classes
Education: Ben completed a Bachelor’s degree in Economics at the University of Edinburgh and a Master’s degree in International Finance at Maastricht University
And at the weekends: Ben tries his hand at different racket sports with varying degrees of success and quenching his thirst afterwards with craft beer