The Gamification Of Investing Brings Opportunity – And Risks

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Founder and CEO at Unifimoney Inc. 

There is no better proof that humans are essentially highly social and playful animals than the meteoric rise of gaming in the last decade or so. What was once a niche market for kids is now reaching closer to a $200 billion global industry with almost three billion consumers across all ages and demographics. It’s surpassing the market size of even the film industry and growing fast.

It’s an industry that’s evolving quickly and across many multiple dimensions in parallel that I believe it puts any other tech market to shame. Industry norms are being disrupted as fast as they are established, with new forms, channels and categories coming and going with equal speed.

Gaming is convergence writ large, with real life, tech, gambling, payments, sports, film, toys, education, social media, entertainment and communications all converging. Anyone with kids witnesses this every single day, with parents often denying tech in order to secure their kids’ attention. By tech, I mean gaming – and more specifically Fortnite, but the next game of the moment is anyone’s guess.

Especially during the pandemic, investing has become more of a hobby and entered into the gaming arena. The stock market has been one of the most reliable wealth creation engines, with annual returns over the last 100 years around 10%, far outstripping savings accounts, real estate and many other major investment categories.

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But investing has historically been the preserve of a small but wealthy minority, with normal consumers excluded through a mixture of cost and lack of information, awareness and access due to the archaic nature of traditional investment methods.

Tech has helped transformed this recently. Robinhood, clearly not an accidental name, launched in 2013 and brought commission-free trading and easy access to stock market investing. Acorns, another early innovation play, made investing so easy and effortless you did not even know you were doing it. Since then, there’s been an explosion of very diverse ways to invest – providing everyday consumers with access and opportunity to grow and protect their wealth like never before.

It’s easy to see why investing is driving engagement in financial services the way other products like deposit accounts and credit cards do not. Investing gives you the chance to interact with the brands you use or like. Love your iPhone? Buy Apple! It also allows you to invest in things you believe in or know about. In the payments industry? Buy Visa or MasterCard. Want to support environmentally friendly companies? There is an index for that.

Investing also allows you to socialize and share information and views the way you never would about our deposits or spending. Some people struggle to share their personal financial situation with their own partner or spouse. But your views on Tesla? There are whole subreddits for that.

Investing is also a competitive sport. You get to boast about your wins and amazing foresight and hide your errors. It’s potentially ego-boosting and provides a dopamine boost in a way looking at your checking account balance likely never will. Investing is about as interesting as money management gets.

Even if you are bored of stocks and shares, there is an almost unlimited number of alternative assets to choose, from the increasingly available cryptocurrencies to the oldest form of investment: precious metals. Investments are also providing new ways to buy old things through apps for fractional investment in fine wine, art, collectibles, farmland and startups.

The pandemic has accelerated this rapidly evolving market. An estimated 13 million people started investing for the first time during the Covid-19 pandemic using just one app. Amateur investor is no longer a rare term. The potential impact of society’s long-term wealth creation is profound. But it also comes with a cost.

There is a reason any investment ad has a disclaimer that the value of investments can go down as well as up. As powerful a creator of wealth as the stock market can be, it can also destroy it. As with gambling, the risk-reward nature of investing can incite unhealthy behavior, and using words like addiction to describe some people’s behavior toward investing is not uncommon.

Robinhood has been the poster child of the good but also the bad that comes with it. It has been accused of promoting gambling-like behavior and exploiting people’s interest and greed to get them to adopt behaviors that are not in their best interests but enrich the company. 

It is, of course, easier to criticize than to solve. The question of how to balance investment access while ensuring adequate consumer protections should be addressed. Some structures exist already, like requiring investor accreditation. However, this can be an inadequate measure and easily sidestepped. It also raises an interesting contradiction: Why do you need to prove your qualifications to invest in startups when you can gamble quite freely without it? The first answer is education. But while both time and money have been spent on consumer education, there is still a lack of financial education.

An alternative might be to teach through experience – for example, promoting low-dollar, low-risk investing from childhood. My own children have Stockpile accounts where they can invest a portion of their pocket money. They check their portfolios every morning and invest in brands they like or use. They feel wins and losses very keenly and personally as they discover the up-and-down nature of stocks. They are learning one of the first lessons in investing: risk. Watching them has shown me that it is difficult to beat direct experience.

The second answer has to include some degree of gating for higher risk investments. This should include regulatory oversight and legal structures similar to what we have in gambling, but most importantly, it must hold companies offering these services accountable. Without that, you risk undermining the very thing you seek to achieve when increasing access to investing.

Giving people unrestricted and irresponsible access to complex financial products that can harm them has to be addressed by the industry and regulators. The sooner the industry moves to solve this the less likely regulation will grow to the point of potentially restricting open access to the benefits of investing – and the risks it brings with it.


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