The Unexplored Territory of Gaming for Banks
With a net value of $ 170 billion, the gaming industry is bigger than Hollywood. On August 26, we invited special guest Bjorn Cumps, Professor Financial Services Innovation and FinTech at Vlerick Business School and secret guest Chris Skinner, author and commentator, to discuss the unexplored territory of gaming for banks.
What are the opportunities for financial services? How can they contribute to the thriving community of gamers? Is there room for financial services in the so-called Metaverse? Equally important: are there any learnings from the gaming industry for banks?
At least one thing I learned after this session: one hour was nearly enough to start a dialogue. So we will definitely break this topic into pieces for more discussions in the future.
I decided to structure the blog likewise, as an inspiration for more sessions to come. I decided to break it into three pieces:
- Platformication of banking
- Gamification of banking
- Bankification of gaming
Gamification of banking
Gamification quickly and organically took a prominent place in the program. Banks talk about gamification for many years. They also tested the concepts for many years. A few succeeded with good results, but even more, failed.
The discussion shifted to how gamification can make people better, to whether it reduces friction, that way becoming a structural element of banking that people like. If you cannot achieve that, the project is doomed to fail.
Chris shared a good example where gamification has a positive effect on people: "I think particularly for financial literacy and early education, it's a great way of encouraging kids to learn about how you could lose a million dollars or gaining million dollars without actually losing or gaining."
Bjorn confirmed this and added a clever observation: "What is typical about gaming is that it is designed, it is cleverly designed, in such a way that you enjoy failure. Not many things in life are designed like that, games are. Game developers have mastered that brilliantly. We fail over and over and over again, we like it, we learn from it, and we keep doing it if a good game is like that."
On the other hand, earning badges for more wire transfers are not a good example of stimulating your customer to become a better customer. Bjorn added that in situations where serious matters like banking or financial services start to feel too much like a game, people might lose a sense of reality, and that could end up very problematic.
In this context, Chris also shared the example of Kweku Adoboli and Jerome Kerviel: “Two rogue traders at Société Générale and UBS who ended up treating numbers on the screen as a game. They lost billions of dollars for UBS and Societe Generale. So we need to use gamification to encourage good financial behaviours and discourage bad financial behaviours.”
Platformication of banking
However, before we started talking about gamification, Bjorn shared another fascinating element of inspiration for financial services coming from the gaming industry: platformication.
OK, I use some poetic freedom here. No one used the word ‘platformification’ during this session, but essentially, Bjorn stated that the gaming industry was the oldest industry where platforms originated. The whole console business wasn’t about selling consoles. The games were complementary products for consoles, and this set the basics of a platform organisation.
Gaming is currently also the industry that is showing an evolution in the way they govern platforms. Where platform business used to symbolise the locking in of customers as much as possible, several new platforms are opening up. They embrace open architecture, and through blockchain technology and NFTs, some allow the transfer from one platform to the other.
Nonetheless, Bjorn believes that we are still far from the integrated digital world where borders between platforms fade away: “My opinion is, that the more I understand how gaming and the gaming business models have changed and changed over the last couple of years, the more difficult it becomes to really integrate over all of these different platforms.”
Indeed, as games grow, so does their power over the community and locking them in on a proprietary platform is often still part of the strategy to achieve that.
Bankification of gaming
Something completely different now.
Only a few banks are positioning themselves today in the gaming industry to attract a new pool of potential consumers. “Barclays has an entire dedicated page only to all their activities for the esports community. Santander has a collaboration with an Esports team. Credit Karma has a deal with Valorant from Riot Games”, shared Bjorn.
The best example he found was from Société Générale, that launched a credit card with Mastercard focused on the gaming community. Instead of linking dull insurance products, they added discounts and other game-related featured to the card.
Today, many people talk about the Metaverse, “a collective virtual shared space including the sum of all virtual worlds and the Internet”. Chris doesn’t; he prefers to talk about the Finverse, how financial services fit into the Metaverse.
This brought us to exciting visionary discussions of where we’re evolving to as a society, as a financial services industry and how different digital and virtual worlds can be linked to the physical space.
Chris explained: “We're approaching very rapidly the idea of the holodeck on the Starship Enterprise, or whatever next generation you're in, where you literally walk into a game, and it feels real. And then you walk out of the game, and you're back into reality. But whilst you're in the game, there will be financial services of some form.”
Some of you may remember Second Life, a virtual world developed by Linden Labs. People created their own avatars and lived a second digital life in Second Life.
Blockchain and the whole NFT business are turning this virtual reality upside down. Increasingly more online games allow people to save items, virtual assets outside the game. Virtual and real, virtual and virtual, are no longer 100% separate worlds.
That is where organisations like Venly are adding value and where financial services can bring services on the table that matter to the gaming community, in my opinion.
As these new realities flourish, Chris rightfully raised the concern about governance. How do governments, or societies, if you like, deal this these new digital economic superpowers?
Bjorn: “It is interesting to follow how these industry structures are changing and how these little economies are forming within these still not connected different universes.”
It is interesting indeed, and given the many open questions, this session left us with, rest assured that many more sessions on this topic will follow.