Millions of low to moderate income consumers have poor levels of financial literacy which adversely affects their ability to manage their finances and to plan for the future. The increasing complexity of financial services and the rising costs of key milestones such as accessing higher education or taking retirement mean that a reconsideration of how we provide financial education to the population at large is urgently required.

A US non-profit organization, Doorways to Dreams Fund (D2D), is at the forefront of a path-breaking initiative which uses the techniques of computer games to pass on vital financial understanding and planning skills to users. Traditional classroom methods of developing financial skills typically meet with a cool reception from the young and have high drop-out rates, whilst older people are often loathe to go back into an educational setting for this sort of information. What D2D terms ‘Financial Entertainment’, uses the medium and techniques of computer games, and is proving to be an engaging and effective way to build financial capability and to encourage participants to take action to manage their financial affairs.

‘Adults of all ages are woefully poorly educated about financial matters’ says Professor Peter Tufano, Chairman of D2D fund, Professor of Finance and Dean of Said Business School, University of Oxford. ‘It is clear that traditional approaches to educating people about finances are not working well enough to meet our needs, and that new thinking is required to address this pressing problem. The work we have been doing with computer games at D2D has yielded some very positive and encouraging results. For a relatively low cost, we have developed and deployed a series of computer games which demonstrate significant gains in financial understanding for their users. This could be an important part of the picture in improving financial literacy across society.’

The five games developed by D2D are intentionally easy and addictive, with popular non-violent motifs such as celebrities, vampires and farms, and are built for short play sessions. The popularity of the Angry Birds titles, for instance, demonstrates the potential of such games to reach millions of users via a range of devices including smart phones and social network websites. But these games are not just entertaining but have an explicit educational purpose ‘ to positively affect the economic lives of low to middle income individuals, leading to improvements in their financial capability.

‘The beauty of the games is that users find them fun and stress relieving, and positively enjoy playing them. For that reason, they will invest sufficient time in the game to build their financial skills and confidence. We see a significant improvement in individuals’ financial skills, but also in their self-belief in their capacity to take financial decisions in the real world. And this is the big challenge – to convert their learning into sustained behavioral change’ says Professor Tufano.

D2D has run a series of successful campaigns with partners to market and distribute their games to their target low-income audience, particularly females. One initiative undertaken on a US military base using D2D’s Celebrity Calamity game involved a tournament to engage young enlisted personnel and their families in financial education. Over 6,000 plays of the game were registered, with one participant commenting: ‘I think it’s a great idea to play for high scores against others in your military community. I played far, far longer than I would have otherwise and the repetitive play drilled the recommended procedures into my head.’

In a corporate partnership with office supply company Staples the focus was upon building commitment to retirement planning and an understanding of the products available. Getting consumers excited about retirement savings is difficult so D2D’s game heightens the stakes by having the players be a vampire: ‘When you’re immortal, retirement is eternal!’ D2D created a customized version of Bite Club, its vampire retirement planning game. The game was designed to allow Staples employees to take real world financial action at certain points throughout the game. They could access their employee benefits accounts and make changes to their retirement savings plans and Health Savings accounts. Over 7,500 employees made 9,600 visits to the game, despite the fact that workers could not play on company time and there was no requirement to participate. A range of initiatives to both market the game to employees and to provide supporting information were put in place.

D2D has also worked successfully in a number of colleges with initiatives designed for young people, both to develop broad financial awareness but also specifically on building funds to pay for their college education. At Ivy Tech for instance, over 45,000 visits and gameplays were recorded.

Many of the initiatives end with a call to action for participants, such as offering them the opportunity to sign up for more financial information (such as on saving for emergencies) or asking them to make an initial commitment to their financial health, such as agreeing to a three-month savings plan or buying a savings bond. In one case, 60 percent of participants requested more information, 40 percent made a three month commitment to save, 36 percent requested a free credit report, and 3 percent purchased a savings bond.

The financial understanding of users is tested before and after their engagement with the games to show the extent to which they have benefited from the experience and increased their knowledge and confidence levels.

‘The many projects and pilots we have run demonstrate the potential of financial entertainment to engage consumers, improve their financial literacy and confidence, and point them towards positive actions’ says Professor Tufano. ‘There are more questions to be answered though, especially about sustained behavior change and generating positive economic outcomes and we are working to refine the games further to maximize their effectiveness and achieve long term real world financial change such as increased savings, reduced debt, better financial planning, informed investing and increased income.’