Banks Start Playing Games with Your Money

"It's a word that 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. And the ability to push games out in smart phone and tablet applications probably contributes to the interest, too.

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But financial games may have a more serious social purpose too: Some policymakers believe that bank-run lotteries can encourage lower income people to save more money.

Of course, it's not just banks that are "gamifying." Zynga, the company that creates social-network games like Farmville and Mafia Wars, raised $1 billion in its recent public offering on the expectation that its commercial tie-ins with companies like Pizza Hut and Paramount Pictures would pull real cash from the 200-million monthly active users the company claims. Web network marketing companies like Groupon and FourSquare offer participants badges, crowns and other awards.

$2.8 BILLION OUTLOOK SETS UP HYPE

Gamification is a $100 million market that should grow to $2.8 billion by 2016, according to M2 Research, an Encinitas, California, analysis firm, that is assessing the trend across the board. Another consulting firm, Gartner Inc, says it expects that by 2014 "more than 70 percent of Global 2000 organizations will have at least one gamified application."

But because game attributes are hard to define these numbers can be dicey; it's a little bit 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, for example, Visa has been running contests in which cardholders would be entered into lotteries every time they used their cards, for prizes like 100 times their purchase amount or a year's worth of bills.

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.com to bring in user accounts from hundreds of financial institutions.