Money games

A NEW VIDEO game has got its hooks into Brian Kealer, a 26-year-old San Francisco software engineer. He’s not killing birds or using his vocabulary to impress his friends. Kealer is after real prizes, such as the iPad2 he just scored. And he’s playing with his bank account.

At least once every day, Kealer signs into SaveUp.comand does some financial activity that wins him credits he can then use to play for prizes. To earn those credits he can pay a credit card bill, deposit money into his savings or watch a sponsored video about personal finance.

To be clear, Kealer’s not making any real dollar bets; he’s just paying his bills. But by participating in SaveUp, he’s playing into the financial services industry’s latest attempts to attract and keep engaged consumers. Call it, inelegantly, “gamification”. It involves the use of game-like attributes and mechanics – contests, prizes, scorecards, badges, friendly competitions – to make the boring business of money more appealing.

“It’s a word everybody hates, but it is descriptive of what’s going on,” says Jim Bruene of Netbanker, a banking technology consulting firm.

Financial firms are turning to games to attract a younger demographic that may be impervious to advertising. Online games afford banks a cheaper way to attract customers in an era when interest rates on savings are practically nil, debit card fees are capped and banks have small margins and little leeway to throw rewards at consumers. “It doesn’t cost much” for bankers to market this way, he says.

Of course, it's not just banks that are "gamifying". Zynga, the company that creates social-network games such as Farmvilleand Mafia Wars, raised $1 billion in its recent public offering on the expectation that commercial tie-ins with companies such as Pizza Hut and Paramount Pictures would pull real cash from its 200-million monthly active users.

Gamification is a $100 million market that should grow to $2.8 billion by 2016, according to M2 Research, a California analysis firm that is assessing the trend across the board. Another consulting firm, Gartner, says it expects that by 2014 “more than 70 per cent of Global 2000 organisations will have at least one gamified application”. But because game attributes are hard to define, numbers can be dicey; it’s difficult to isolate what counts as gamification and where the profits come from.

So loud is the buzz that Gartner recently placed gamification on its “hype cycle” – a list of technology trends – at a place where it is approaching the “peak of inflated expectations”.

Banks have been a little bit slower to come to the game table than other companies, perhaps worried that using frivolous games to market serious financial products would be perceived negatively. But in 2011, CapitalOne did a promotion inside a couple of Zynga games, and credit card companies have been running sweepstake-like promotions for years. Since the early 2000s, Visa has been running contests in which cardholders would be entered into lotteries every time they used their cards.

Currently, Chase is gamifying its bank account promotions; in the third quarter of 2011 it ran a $6 million sweepstakes for customers who paid a Chase bill (like a mortgage or credit card) with a Chase checking account.

The new players are a little bit different. SaveUp, a San Francisco startup, isn't a bank; it's an intermediary that hopes to attract banks as marketing clients, but consumers can play regardless of what bank they use. Behind the games, SaveUp is an aggregator that claims to use the same technology as Mint.comto bring in user accounts from hundreds of financial institutions.

The financial games get really serious when they have a higher policy purpose. A paper published a year ago by the US National Bureau of Economic Research suggested that savings accounts with a lottery component could encourage low-income families to save more money.

These prize-linked accounts, which offer savers a chance to win a specified (and potentially large) amount of money, are already offered in various countries, including many in Latin America and Europe. In Great Britain, the government issues Premium Bonds that pay off in lottery chances instead of interest.

Prize-linked savings accounts were piloted in the US, starting in 2009, by a group of Michigan credit unions, and now some in Nebraska have launched a new “Save to Win” programme at the beginning of this year.

Leaderboards and badges "are all elements of games that make you feel like you are achieving something", says Gabriel Zichermann, a gaming expert and editor at Gamification.co.

But not everyone is a believer. “If that works to get some people to have good behavior, I’m all for that,” said Mark Schwanhausser, a senior analyst with Javelin Strategy Research, a consulting company that monitors financial services trends. “But it’s like mixing a game into something that is pretty serious, and I don’t think it’s going to be a widespread winner with banks.”

Gartner analyst Stessa Cohen doesn’t think banks can afford to ignore this trend. Basic bank services are becoming commoditised and intermediaries such as SaveUp and Bobber could easily induce gamers to switch financial services companies – consumers banking through intermediary firms could easily switch banks if another deal came along.

“That’s a big problem for banks,” she said. “They may think, ‘we don’t have to pay attention to that’, but all of a sudden, 10 per cent of their customers are just using them as a storage facility.” And it’s not clear that the financial gamesmanship will win over those coveted Gen Y customers, either, despite the blatant pitch. “GoalCard is integrated completely into the Facebook ecosystem, which our Gen Y user Nathan uses as his primary filter for relevance and validation,” Bobber Interactive’s chief executive Eric Eastman says of the model Gen Y customer he uses in presentations.

That sounds like a challenge to a pretty cynical generation. “They don’t believe anything a brand says,” says Zichermann. “‘Oh, really? That’s the fastest car? And the tastiest burger?’”

But a free iPad is a free iPad. Kealer, a Gen Y-er who says his job involves discovering new mobile apps,cast his cynicism aside after winning the coveted tablet and a $100 Macy’s gift card.

“This is a good time to play because fewer people are participating,” he says. He makes a good point. As more players join the games, and the financial games themselves proliferate, it may get harder for consumers to win at these contests. Just choosing which games to play may start to feel a lot less like play and more like work.

– Reuters