The gamification of banking: how are challenger banks changing our relationship with money?

Fifteen — or even ten — years ago, the thought of securely transferring funds in just a few taps, at any time of the day or night was pretty much unfathomable — let alone without the recipient’s sort code and account number.

Yet today, online banking is synonymous with mobile banking, and while traditional high-street banks have adapted with apps of their own, challengers like Monzo and Revolut have used gamification to completely transform how a whole generation interacts with money.

So, what exactly does gamification entail when it comes to banking?

Through a range of features, capabilities and stylistic choices, “neobanks” have made money management both more accessible and more engaging. I’m going to focus on Monzo here, which is now the UK’s largest digital bank, having gained 2 million new customers in 2023 alone.

When Monzo first entered the market, it capitalised on convenience; paying out a referral bonus to incentivise app downloads, and offering a wholly unprecedented way to pay or request money from your contacts instantly, with minimal information required. This friend-centric functionality, paired with the iconic neon debit card, made it an instant success with millennial consumers, and the younger demographic.

Since then, Monzo has implemented a whole quiver of banking tools, including a super useful “Shared Tab” feature, which enables several people to add different costs to a single bill, and then automatically calculates what each individual owes.

There are also Monzo “Pots” to help with budgeting, the option to emoji react when your friends pay you back, and a detailed analytics dashboard called “Trends”, which includes monthly spend tracking — as well as notifications when you’re spending more or less than normal.

Last year, the bank even took a leaf out of Spotify’s playbook with its “Year in Monzo” round-up, where you could find out just how much you spent at Greggs in 2023, or discover you’re in the top 5% of Deliveroo customers… predictably, this data-led campaign did very well on social media!

Have these challenger banks actually changed our spending behaviour, or our interactions around and about money?

For me, the answer is yes. Here are some of the key ways I’ve noticed myself (and my social circle) being influenced by the capabilities of the app.

Frictionless digital bill splitting

Brits are notoriously reluctant to chase an amount as negligible as a fiver, and the subject doesn’t get less awkward as the financial amount increases. With apps like Monzo, the request is digitalised, but it’s also linked to the original payment so the recipient is actually reminded what was purchased. This functionality all but removes the need for a direct mention of money — “I’ll get it, just Monzo me” (it’s a verb now).

Clear (and constant) visibility of spending habits

The volume and consistency of the data Monzo delivers makes a real difference. Every card payment triggers a push notification on your phone, containing the retailer and monetary amount spent — so you can’t blame amnesia and tap away in blissful ignorance. This precise visibility of my spending patterns makes budgeting for monthly outgoings basically foolproof.

Separate spending pots

I mentioned it earlier, but the “Pots” feature has made saving for several things at the same time really straightforward. You can set clear goals for each pot, and “lock” pots containing cash you’re determined not to touch — if you want to access the funds, you’ll have to manually unlock the pot, which does make you think twice.

Given how simple it is to split an expense, using the app has also made me more likely to recoup funds I might have considered writing off before. It’s even helped to dissolve the tension that can sometimes come up on group holidays — for instance, when the one hyper-organised person on the trip has the forethought to do a foodshop, and ends up footing the bill. With Monzo, you can easily keep track of who’s paid for what, so no one gets the short straw.

It seems that Monzo has truly paid attention to the needs and experiences of the younger user when developing its features — and the slow, functional capacity of high street banking apps pale in comparison.

As the Monzo cohort ages, will they stay loyal to the brand, or look to more traditional alternatives as their priorities shift?

The early adopters of digital banks like Monzo have reached the age where their financial priorities change. Forget interactive campaigns and emoji reminders — they need mortgages, business loans and ISAs, yet they’re still turning to established giants like Natwest and Lloyds TSB for services like this.

While Monzo isn’t currently offering mortgages — and likely won’t have the capacity to move into that space for many years — we shouldn’t underestimate the ambition of the brand, which has just secured £500m in a round of fundraising, with investments from a top tech investor that already supports giants like Airbnb and Uber. It might be the colourful current account that gets customers through the door, but Monzo now offers a long-term “Savings Pot” with one of the most competitive interest rates on the market.

The biggest conventional banks have already invested considerably in upgrading their online banking services, making their apps more efficient, user friendly and delivering new analytics insights. But how far will they go to keep up with market disruptors? And should they be trying to keep up at all?

Throwing out new features to entice a younger generation could well compromise brand trust amidst their older demographic. Does anyone truly want their mortgage provider to communicate via emoji? Or do consumers look for a more sincere, straightlaced brand when it comes to long-term financial services?

Clear insights into what consumers want and expect will help banking brands stay one step ahead, and thrive in a financial landscape that’s been transformed by gamification.

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