Supporting Investor Behavior with Innovative Technology and Gamification

Eileen Alden, Senior Vice President, Head of Portfolio Strategies, U.S. Bank

Eileen Alden, Senior Vice President, Head of Portfolio Strategies, U.S. Bank

Imagine this: A crowd packs the esports stadium. The audience cheers as a popular K-pop band appears in holographic form to perform their latest hit song. The last note rings out; the stage goes dark. A spotlight shows two individuals on stage. They sit down in position behind their monitors, ready to compete. All eyes turn to the 50-foot LED screen in anticipation as the two determined players begin – to rebalance their portfolios.

Clearly, this scenario is farfetched. But not long ago, we might have also considered it farfetched to imagine the number of 14 to 21year olds who watch football games would be matched by the number watching people play video games, or that a full 73 percent of all Americans in this age group either watch or play these games .While gaming is hugely popular among teens and young adults, only 20 percent of adults between age 40- 65 play or watch online games–which is why it should come as no surprise that traditional approaches in the investment industry have served this older cohort. However, there are lessons to be learned from the engagement of digital natives, and new principles to consider if we as an industry are going to innovate in the digital investing landscape.

A primary tenet of innovation is to encourage interdisciplinary approaches to problem solving. The design thinking approach used in the gaming industry can serve as a great lens through which we can understand digital investor behavior and hopefully improve investor outcomes. “Gamification” applies game design principles to other businesses. A game framework can help explain a user’s motivations as they progress along a digital journey.

Technology advancements allow us to deliver extensive market insights and portfolio data right to an investor’s mobile phone. But information alone does not support good investor behavior. It’s just one part of the equation.

"Perhaps the biggest insight from game design is the importance of customization and motivators"

Easy, direct digital access to investment information and analysis distances investors from the behavioral support system that they traditionally received from their advisor relationship. Client-facing professionals who have served as valuable investor guides become disintermediated in a purely digital interaction. To fill investor needs beyond just digital self-service, some organizations offer supplemental access to a human advisor who stands ready to assist, resulting in variety of tool-plus-human hybrid models . But we could improve on that bifurcated solution and bridge some of the gap if we innovate and think about the digital investor journey differently, using gamification. Below are three specific cues we can take from the video game industry:

Integrate transactions and education

Game designers have observed that players find satisfaction when they accumulate rewards for simple mechanical activities, but they get even deeper satisfaction from developing and improving their skills . A human advisor shares knowledge naturally, by working with a client over time, explaining pros and cons of different choices and answering questions to help educate them about making good investment decisions. Advisors connect context to investor choices. But for digital access, the investment industry tends to divide investor education and transactions into two separate silos of activity. Games, however, do a great job of integrating these two elements, which promotes self-improvement.

Aesthetic design matters – even for investing

Another game element we can learn from is an emphasis on the aesthetic. Traditionally, most advisors would recognize the benefit of a great physical space for meeting clients. When an investor feels comfortable and enjoys being in a meeting space, they are more likely to spend time positively engaged, which should lead to better outcomes . When investors interact digitally, we need to pay the same level of attention to the design aesthetic. Game players may spend hours immersed in a digital space, they don’t come to a game to transact quickly and then leave. Games offer an emotional connection, not just speed and efficiency. We need to think about our digital investor space as an immersive environment where a client should enjoy spending a lot of time.

Customize for what motivates

Finally, perhaps the biggest insight from game design is the importance of customization and motivators. Traditional investment advisors tune their communication to specific clients, going beyond demographics or asset levels or any type of investor profile segmentation. A human advisor tailors their interaction based on a client’s behavior and psychology, and can deliver the same information in a variety of ways. Game designers also recognize that individuals interact with games in different ways in a digital space, even if those individuals have the same goal, and they incorporate specific player motivations into their designs. Applying this thinking to investor behavior, we can see that an individual who enjoys competition may be more motivated by progress relative to a benchmark, and may crave a sense of “winning”. Those motivated by accomplishment may get satisfaction from observing progress relative to milestones. Socially-motivated individuals may be more engaged when they have peer reinforcement and a means to share their progress or collaborate. Like game designers, we can adjust the digital experience based on investor behavior and motivation.

We may never pack an esports stadium with digital investment fans. But as we embark on digital transformation and expand our use of technology, it’s worth expanding our thinking as well. We can gain insights from game play as we look for ways to customize the investor journey. A human advisor may not always be present to serve as a digital investor’s guide, but we can think in new and innovative ways to create digital solutions that support investor behavior and guide users toward successful outcomes.