Persuasion and Gamification in Fintech

We don’t like to admit that we are easy manipulation targets — but we are. In his classic book, Prof. Robert Cialdini talks about five ways to influence people. In summary, we can be persuaded through (with some fintech examples):

1. Reciprocity  – People tend to return a favor, therefore marketers love to give “free samples”.

2. Commitment and Consistency – If people commit, orally or in writing, to an idea or goal, they are more likely to honor that commitment. Why some budgeting tools will ask you to “set targets”.

3. Social Proof  – People will do things that they see other people are doing. The main reason why mobile app developers will show how many “downloads” they have — never telling you how many “uninstalls” they experience.

4. Authority  – People will tend to obey authority figures. The reason why Brett King and Chris Skinner are so influential in Fintech, even though their “authority” is derived from competence, not a state or organization.

5. Liking  – People are easily persuaded by other people that they like. Why likeable sales people hugely outperform the grumpy ones (no examples necessary).

6. Scarcity  – Perceived scarcity will generate demand. “Available for a limited time only”. Some people still fall for this.

When reading the list, I am sure you thought “this would not work for me” — and you are right. Each of us has a “persuasion profile”, going all the way from “most gullible” (just joking…) to “never trust anything/anyone”. Some great work is being done in this area by ScienceRockstars, and it is just the beginning of what is possible when you combine proven psychological research with big data availability and processing techniques of today.

Gamification is a product of the same thinking — a collection of tools designed to change behaviors. One can think of gamification as the simpler, cruder version of persuasion. The benefits most cited include better innovation results, employee performance management, education, personal development, and customer engagement. It achieves its objectives by leveraging people’s natural desires for competition, achievement,  status, altruism, and a sense of community.

Feel manipulated again? As for persuasion, each of us has a “natural desires profile” — for some status is more important, for other collaboration, and so on. And again, by combining big data techniques with gamification, smart companies know, customer by customer, who likes what and by how much, between points, badges, levels, leader boards, etc (the most used gamification techniques).

Some of the reasons to use these techniques include understanding what motivates customers and keeping them happy, and getting customers and/or employees to learn new skills. Examples range from banking customers finally getting a passing grade on a financial literacy test, to employees learning faster complex skills and techniques. Great work done in this field, for example,  by Moven on customers learning how to manage their money — showing that results can be achieved by using “game thinking” and not necessarily building a game.

(Note: if you want to know more, you can join a Coursera class on “Gamification for Business”)

As for the Fintech perspective, it is all about understanding your customers, what motivates them, what convinces them to do business with you and stay with you. Just applying gamification mechanics is not enough if not combined with analysing data available from interactions. And all works only when using modern big data techniques that allow for almost real-time decision making on large data sets.

And another Fintech thought: just building a “financial game” is not enough. That is a crude approach, purely and simple relying on our desire (need?) for escapism. A game is a simpler mechanism for changing behavior than gamification or persuasion, and is by design targeting a demographic that is not always well aligned with a financial services institution customer base. That’s why we see some success with financial games for children (see PlayMoolah, an Innotribe winner from 2012) but very limited take on financial games for any audience a little bit north of 6 years old.

From persuasion to gamification to games, fintech startups have a spectrum of techniques to use — it’s to them to select what they think works best.