But let’s see what gamification is and if the problem is really as serious.
Simply put, gamification adds game-like elements to other apps or services that are typically not considered a game. These elements can be anything, from various rewards and points-collecting to competitions and rules of play. It also refers to the design of the apps themselves.
While this may sound like lots of fun, gamification is increasing user interaction. And with higher interaction, there’s more chance for traders to make mistakes and suffer losses. Trading stocks or other assets is a serious matter and shouldn’t be taken lightly.
When traders can earn rewards for reaching minimum trading volume or executing a certain number of trades, they will feel pressure to invest more. This pressure can lead to choosing bad trades and indulging in risky ones that investors typically avoid.
With a nicer design and funnier features, investors can easily take investing as a game. This slippery road on the anyways slippery field can lead to unimaginable consequences.
For now, this warning only affects stock trading apps and consumers. However, in the same announcement, FCA stated that it would continue researching the matter. It will go further into trading apps and designs, looking for anything that can mislead investors or take them in the wrong direction when choosing a trade.
‘Some product design features could be contributing to problematic, even gambling-like, investor behaviour. We expect all firms that offer stock trading to consumers to review and, where appropriate, make improvements to their products based on these findings. They should also ensure they are providing support to their customers, particularly those in vulnerable circumstances or those showing signs of problem gambling behaviour.’ – Sarah Pritchard, Executive Director of Markets at the FCA.
According to previous surveys, FCA discovered that 9% of all adults borrow money to cover losses, while 49% of these borrowed even the initial sum to invest. Such results are pretty concerning as they display gambling behavior at the start. With gamification, numbers are expected to rise, which could lead to devastating results.
Additionally, badges and other awards can stimulate competitive behavior, which can lead to excessive investments and, finally, losses.
Besides, push notifications inviting people to read the latest stock news, or showing flashing market prices, can also drag investors’ attention from what really matters. Traders may be encouraged to use higher leverage or invest a bigger sum of money.
All in all, in-game elements can lead to reckless behavior and various consequences for investors’ finances.
While it’s yet to be seen whether this FCA warning will impact trading app owners and makers to change their behavior, it’s definitely something to consider. Are you making an investment decision because you’re certain of the outcome or because you want to be the first on the board?
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