Silicon Valley? Tel Aviv? Maybe London?

Try Asia — which is the current hotbed of financial innovation, according to an Efma/Infosys report released Oct. 21. The world’s largest continent offers a combination of a youthful population, deep mobile penetration and a high level of comfort with technology.

95% of the banks in Asia reported an increase in budgeting for innovation in 2013 versus 2012, according to the report. This compares to 73% of the banks in North America and 58% of the banks in Europe reporting an increase in innovation budgets over the same period.

In the United States, young people do not seem to be interested in visiting bank branches. Banks with the technology capacity are making efforts to reach young people where they live — on their mobile devices. Banks in Asia, meanwhile, have to deal with a population that is significantly younger than that in Europe and the US — a median age of 28.1 in Asia compared to 36.4 in the US and 39.9 in Europe, according to worldstat.info — and consequently are employing gamification in financial services to a greater extent than counterpoints in North America and Europe.

“Gamification” does not necessarily refer to games or gaming, but rather to the idea of winning at something as a result of some action. It is often used by providers of personal financial management (PFM) software for things such as budgeting, where budget goals can be met or not. if you meet the goal you set up, you win.

In the Asian context, according to Rajashekara V. Maiya, associate vice president & principal-Finacle product strategy at Infosys, gaming is pervasive among members of Generation Y, and gamification is commonly employed to appeal to them.  Maiya pointed to the case of QQ, a virtual currency used in China to purchase gaming credits. QQ gained wider use and became so pervasive among young people that it threatened to destabilize the yuan. (China is in the midst of another virtual currency infatuation with bitcoin at the moment.)

Maiya gave five examples of gamification from banks in countries with developed branch networks and stronger infrastructure than Asia as a whole. In Malaysia, Singapore, and South Korea, mobile phone usage and social media participation are near-universal — 96% — for members of Generation Y.

1. Uth Nation. In order to connect with younger customers, CIMB Group in Malaysia launched an initiative called CIMB Uth, Uth standing in as a homonym for “Youth” and the U meaning “you,” according to Maiya. “CIMB uses PFM in the form of games to expose customers to [financial concepts] and help them understand rewards,” he said. “This helps make sure they stay with the bank. It’s education through gamification.” Games as a delivery vehicle for education are intended to build loyalty and brand affinity.
2. Let’s Be Frank. In Singapore, OCBC Bank launched an initiative called Frank by OCBC aimed at young people and students. Finding that its traditional branches were going unused, OCBC set up Frank by OCBC Stores in malls and other shopping areas that mimicked retail stores. The walls were decorated with photos shared on social media with the bank. Frank offers advice and education on its website. Frank is an interesting play, being a new brand that still includes the older, stodgier brand, coupling innovation with stability.
3. Play Day. OCBC also partnered with Playmoolah, which was demonstrated at Finovate Fall 2012. Playmoolah uses games and videos to teach pre-teens about using money and the basics of concepts such as credit, charity and debt. Playmoolah’s website is set up like a smaing site. The buttons to click upon visiting are “New Player” and “Returning Player.”
4. Getting Real in Singapore. Singapore is in a leadership position in payments, as well. Fundtech, in a global study looking at the speed of payments, also looked at Singapore, which is launching one of the most intensive pushes for real-time payments in the world, to be delivered in 2014. Gene Neyer, senior vice president of global payments, said of Singapore: “It has some of the best physical infrastructure in the world. Its communication infrastructure is excellent.” Add to that political will and a small geographical area, and it’s clear how Singapore is well on the way to creating a real-time payments network, which will be called G3. “The challenge in Singapore was more logistical and political than technological,” Neyer said. “It worked out well and will be delivered ahead of schedule.”
5. Avoiding Too Much Makeup. Hana Bank, headquartered in Seoul, South Korea, offers a smartphone wallet app with extensive personal financial management features such as budgeting and projecting spending — on makeup perhaps — as well as game-like elements on the statement that visually represent spending in lighthearted ways. This direct linking of payments with financial management is mimicked by the startup Moven in the United States, which also offers instant feedback on purchases, tying them to the customer’s larger financial picture.

72% of younger customers in Asia feel that online promotions do not speak to them, according to Infosys’s findings. “The promotions are not relevant; they are not seeing what they want,” Maiya said. “Many banks do not a have clear process for testing issues related to younger customers, who are willing to share information when they understand the benefit of doing so. “Openness and social media use cross all industries,” Maiya said. “The power of youth to market products [to each other via social media] is very large.”

Banks in the US and Europe are leaving money on the table when it comes to young customers, who increasingly rely on alternative financial service providers for services such as person-to-person payments that many community banks do not offer. Asia is the epicenter of the struggle to win over young customers. In a continent with so many young people, Maiya said, “It is not an option to ignore them.”