Gamification in Investing

This post is in continuation to my previous post where I tried to derive insights from Indian retail consumers behavioral pattern on e-commerce platforms and see how this behavioral pattern can be technologically established on an Investment platform to bring in more retail investors in Equities markets.

In this post, I want to bring in another interesting element used in modern day digital world called Gamification which means the application of typical elements of game playing (e.g. point scoring, competition with others, rules of play) to other areas of activity, typically as an online marketing technique to encourage engagement with a product or service.

Gamification is exciting because it promises to make the hard stuff in life fun. For most of the people, Investment is still an intimidating aspect of Personal Finance, any measures that can cause people get active in Investment are good for individuals, their dependents, and for the overall economy. Can Gamification be one of the measures that can make the investing process easier with lessened risk ? A lot more people can then be attracted to investing. This is performing a social good, and making a ton of money doing it.

I do think there will be an exponential rise in people investing than in past decades, in large part due to availability of smart digital tools meant to help new investors deal with Investments in a seamless and scientific manner with increased trust and zero biases. Be it established Investment Advisers, Mutual Funds, Banks, Brokerage houses, new generation Robo advisers, or the Social Investing platforms, everybody is riding hard on the power of technology to make Investing an easy process for the Investors. Focusing on Gamification for this post, let's take examples from both expense side and Investment side technology platforms available for retail consumers.

 Taking the e-commerce example for expense side, we see how some major e-commerce platforms used Gamification to increase customer engagement and eventually the sales. Starting with big shot e-commerce player Alibaba, during the Singles' day sale,  it used the concept of gamification into the app, bringing the user back to the app, several times a day. It rewarded users with coins and coupons to be redeemed on the Singles' day, so users came back to win more. A week before the sale, thousands of $5 and $10 coupons were already won which meant buyers were ready to pounce when the sale began. Recently, Myntra, an Indian online fashion shopping e-commerce site also tried engaging customers using Gamification before their biggest year end sale.

Now advancing to a related example in Investment world but for seasoned individual investors/traders where a company Quantopian in Silicon Valley is providing consumer facing web browser based algorithmic trading platform to individual Investors/traders backed by an active community, technology, data, Investor capital. One can just start building an algorithmic strategy starting with some hypothesis, facts, a set of assumptions and the platform provides everything else including the data, back-testing platform to establish the idea and even put it for paper/live trading.  The best ones can even compete for Investment capital. You see the whole strategy building process has been gamified and in the process have formed an active collaborative community of algorithmic/quantitative strategy developers competing with big Institutions for the alpha.

Coming to Indian context on Investing, there is lot of activity going on in the Institutional space on leveraging technology for Trading and Investments but when it comes to consumer facing retail Investment tools and services, there are still lot of gaps in the journey for first time investors from having an interest in Investing to actual Investing. Retail participation in Indian Capital Markets explains this sad picture. Adding fuel to fire is the perception that investing in the market is risky resulting in committing a bigger mistake of leaving a lot money in savings account.

A gamification based approach can definitely create that engagement providing a seamless blend of virtual and real investing: people can join investing with virtual money and graduate to investing with real money. Most of the established financial companies in India have never explored the gaming side of the stock market. Moreover, the companies inherently lack the technological expertise and the culture to build excellent technology products.

The zeitgeist of the day for the established Financial Institutions providing Investment services is to upgrade themselves and re-align their services  to be technology enabled as next phase of disruption can only come if financial companies to a major extent start working as software companies while building consumer facing products. On the expense side for the retail consumers, E-commerce companies have provided the proof of concept in India given the volumes and the best ones work as technology companies.

Goal is to make financial markets accessible for everyone and the key metrics would be the numbers of users using the new technology powered financial services without earlier investment experience.

Disclaimer: Opinions expressed are solely my own and have no relation with the company with which I am associated.