(Illustration by Serge Bloch)
On the third floor of Fidelity Investments’ Boston-based headquarters is a room that looks more like something you’d see at Apple or Google than at a 70-year-old mutual fund firm. It’s in this room, run by Fidelity Labs, that young techies are creating everything from robots that attend meetings to mobile apps. It’s their latest venture, though, that could one day change the way we all view our investments.
Last year Fidelity Labs began testing a game for the Oculus Rift, a virtual reality headset owned by Facebook. When people put the headset on, they see the stock market represented as a city. The taller the building, the higher the price of that stock. The width and depth of the edifice indicates 90-day trading volume and shares outstanding. When it’s sunny in StockCity, the markets are going up; when it’s rainy, the markets are going down. Cars stuck in traffic? That means there’s a lot of market activity. Birds circling a specific building indicate social media chatter about that stock.
These are still early days—you can’t make actual trades, and the program isn’t available to the general public—but it may not be long before StockCity becomes the new Call of Duty. “We want to give people an immersive experience with their market data,” says Hadley Stern, Fidelity Labs’ vice-president. “We want people to better understand the market, but it’s also fun.”
While there are already mobile apps, virtual portfolios and simple online interfaces that make investing easier, Fidelity’s project is taking “gamification”—applying game design and thinking to non-game applications—to another level. Eventually, people will be able to compare their portfolios with those of their friends, real-world trading could be allowed, and in-game rewards might be offered too.
A scary development? Not necessarily. Gamification has proven to be an effective educational tool in other fields, notes Neil Randall, director of The Games Institute at the University of Waterloo. Pilots wouldn’t be able to fly without practising on a flight simulator first, and more doctors are honing their skills with video games that replicate real-life conditions.
Games force people to focus on details, Randall explains. Goals and accomplishments need to be met in order to be successful, so you need to know the material that will help you win. In this case, the more you know about the stock market, the better you’ll do. “The real world becomes a part of what you’re doing,” he says.
In that way, a game could help people better understand the investing world. Right now, 49% of Canadians say they lack investing knowledge, according to an Investor Education Fund survey. In theory, by simulating investing and doing it in an engaging way, we should become better stock pickers. “Simulations are highly regarded,” says Randall. “You can learn all sorts of things in a risk-free way.”
However, there are already games out there that involve winning and losing money, and most of them can be found in a casino. Lisa Kramer, an associate professor of finance at the University of Toronto, worries that if people think of investing as a game, rather than as a way to save for retirement, then portfolio construction could become just another table to play.
A stimulated brain can reduce people’s risk aversion, Kramer says. She points to a study where participants were shown various positive, exciting, scary and neutral images. Their brains were then scanned with an MRI machine, which found that different parts of the brain were activated depending on what they saw. The positive pictures stimulated the part of the brain associated with risk taking. When people were then given the choice to buy stocks and bonds, they bought more stocks.
Technology has already made investing more game-like, of course. What is day trading but a kind of online poker enabled by a discount brokerage account? Today’s smartphone apps allow you to follow your stocks’ movements in real time, daring you to trade more than you ought to. Kramer is concerned that creeping gamification will cause investors to take on more risk than they should. “We need to think about the whole picture,” she says. “If people are in a game context, then maximizing the amount of risk they’re taking may not be the best choice for them to be making.”
Some money managers also argue that smart investing should be boring. But Bob Sewell, president and CEO of Bellwether Investment Management, based in Oakville, Ont., thinks the positives of gamification outweigh the negatives. He’s always surprised by how little his prospective clients know about investing, so he welcomes anything that can help demystify the process. It might cause problems if people try to outperform their friends, but he points out that online trading hasn’t increased the incidence of bankuptcy.
Virtual reality trading, Sewell thinks, will be the domain of day traders and portfolio managers. He’s currently using programs with eye-catching interfaces to make trades, and he’s never felt that casino-like pull to increase his bets. For the average investor, these tools will likely remain educational. “We’re trying to absorb a lot of information in such a short period of time these days,” Sewell says. “A 3D world could help people better understand the markets and opportunities.”
Fidelity’s Stern says he understands people’s concerns, and it’s too early to tell just how StockCity will be used in real life. He can see active traders using it to buy and sell stocks, while retirement savers may one day pop on headsets in the same way they check their portfolios on their mobile phones today. Or they may not use it at all. “It depends on context,” Stern says. “It may be useful for traders, while retirees may not see a game as an advantage.”
Take a tour of StockCity:
MORE ABOUT FINANCE & GAMIFICATION:
- Opportunities 2015: Help banks think more like Apple
- Loblaws’ new “PC Plus” loyalty program is really a game in disguise
- The future of payments is wearable, and it’s already here
- Canadians use cash for only 10% of consumer payments and that figure is falling
- Banks, watch your backs: Millennial clients have almost no loyalty
