Gamification of compliance and regulatory training could save banks millions of pounds in fines, according to a finance software start-up.
True Office chief executive Adam Sodowick believes that banks are often unable to provide effective compliance training despite receiving hefty fines from regulators, and in some cases creating significant damage to reputation.
HSBC, for example, received a £1.2 billion fine in December for allowing its services to be used in money laundering operations in Mexico, while Barclays was forced to pay out hundreds of millions of pounds in fines for not meeting compliance and regulatory demands following the Libor-fixing scandal. At the same time regulatory requirements are growing in volume and becoming more complex.
“People absolutely hate compliance training, they don’t remember it and they don’t take it seriously, yet it is costing banks terrific amount money,” he said. Sodowick added that traditional PowerPoint intensive approaches lead to very low retention of information in core areas such as fraud prevention and anti-money laundering (AML).
Sodowick said that by introducing game elements to compliance training employee engagement can be increased, with real time analytics also generating data that can be used by banks and tracked by regulators.
True Office does this by creating data-rich compliance games based on regulatory rules, combining a user-friendly interface with narratives based on real life compliance failures, and 'gamified' tasks designed to keep users attention.
“There are very few applications outside of a game which get the analytics of the customer response,” he said. “It sounds frivolous using games for compliance, but we have seen companies become able to identify and manage their risk through gaming technology.”
Gamification is becoming an increasingly prevalent method of compiling and engaging with data, driving employee participation through the application of game elements to non-game tasks.
Gartner has predicted that 40% of Global 1000 organisations will use gamification as the main method of transforming business operations by 2015, with the gamification market growing from £155 million in 2012 to £1.8 billion in 2016.
The start-up company has supplied its software as a service product to major international banking companies following its launch in 2010, and last week announced a product development and distribution deal with financial data services provider Thomson Reuters.
Previously True Office has been a participant in the 2012 FinTech Innovation Lab accelerator programme, designed to support the development of financial sector technologies. A UK version of the accelerator has also been announced, situated at the Level 39 start-up accelerator in Canary Wharf.
At the Finovate event in London where Sodowick was taking, US start-up Kabbage has expanded its operation to the UK. Kabbage, which began trading in 2009, offers loans to companies trading in online marketplaces such as eBay and Amazon.
Loans of up to $40,000 (£25,700) are transacted within seven minutes, leveraging data generated through business activity such as social media presence in order to understand performance and inform financing options.