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Advances in finance and financial technology have been happening at a phenomenal rate. These advances are allowing for all sorts of new ideas to enter the market and make business and personal finance happen both more quickly and with fewer issues. Most experts couldn’t be more excited about where the future is taking us.
However, for most of the general public, finances and, especially, personal finance management, remains a difficult thing to achieve. Whether it is a lack of income or poor spending habits, nearly 60 percent of millennials say they wouldn’t be able to cover an unexpected $1000 emergency expense. Overall about half of all Americans report being in this boat.
Because of this serious savings issue, a lot of banks and investment agencies are working to educate Americans and encourage them to save more. But it isn’t easy; immediate financial pressures and a lack of motivation can make saving money seem just about impossible. Many are now turning to fintech that has been gamified to help build savings skills.
The Rise of Gamification
Gamification is the use of game-like techniques and experiences to help motivate people to engage with an idea and eventually achieve a goal. The idea of gamification to help teach and reinforce positive behaviors has been on the rise for the past decade. It has helped change behavior for the better in nearly every realm from education to healthcare to marketing.
One example of gamification in a non-financial realm is in the workplace. Progressive companies such as Google have incorporated games into menial tasks such as entering travel vouchers that people often fill out with errors, costing the company money. Not only do employees earn rewards for correctly filing travel vouchers, but they also can earn money back by spending less on their trip! The gamified travel voucher program creates a competition to spend less, earn rewards, and save Google money in the long run.
Further Reading: From Teaching to Counselling: Current Trends in Gamification.
Many of the most popular gamification strategies involve the use of smartphone apps since they are easy to understand and accessible. In this capacity, cell phones with larger screens are basically functioning as the computers that people use to learn, enter healthcare data, buy products, and even complete financial transactions. Games in the financial sector have made the latter more likely than ever.
Gamification and Financial Health
Some of the most exciting fintech games are those that are working to encourage people to build healthy saving habits by making saving money fun. Often times these apps work by collecting small amounts of money to transfer to a savings account under certain circumstances. For example, apps like Acorns round transactions to whole numbers and deposit the rounded amount into a savings account, while apps such as Nestlings add small amounts to savings accounts as rewards for certain actions.
There is a certain level of psychology to the development of fintech games, though, namely because different audiences are going to have different motivations for saving money. A single person without children in their early 20s is going to have different savings goals than a married couple with three children in their mid-40s. Both likely need to be saving money at a higher rate than they already are, but their response to certain encouragements will differ.
Either way, most experts are now coming to believe that gamification is some sort of “secret sauce” for changing certain behaviors for the better. In today’s world, trying to save money for important purchases while still making payments on things like student loans can be discouraging and cause some people to give up on saving money altogether. Making finances less complex and more fun can be the secret to helping people do better at reaching their financial goals.
Gamification, Fintech, and the Future
There are plenty of ways that gamification will continue to have a positive impact on fintech in the future. Some of these ways are already starting to play out, while others we likely don’t even know much about yet. No matter what, these tools are going to have an impact both on consumers saving money and people working within the fintech industry.
For example, many of us are already aware of machine learning and how it can help automate processes and make business more efficient. However, few of us really understand the idea of deep learning, which differs from machine learning in that deep learning isn’t linear and is designed similar to that of our current understanding of the human brain. Image and sound recognition software are examples of deep learning and tools such as Alexa or Google Assistant could have fintech uses in the future — think games related to digital financial advising or risk assessments.
Going forward, cryptocurrency could continue to have a more significant impact on the fintech industry in general. Newer games that involve financial security and investing could use cryptocurrency rather than one of the many different currencies in today’s global economy. Things like blockchain technology are making transactions safer and, therefore, the long-term success of cryptocurrency more likely.
Gamification has and will continue to have a profound impact on the ways we motivate people to engage in difficult tasks and reach their goals. Within the financial sector, fintech has designed all sorts of apps that encourage average people to save money at a higher rate. Going into the future, there are all sorts of budding fintech ideas that could be influenced by gamification.